Kroger Enhances Shareholder Value - Analyst Blog

The Kroger Company KR, one of the largest grocery retailers, recently announced a new share buyback program, along with declaring its quarterly dividend.

Under the new share repurchase program, which replaced the existing authorization, Kroger's board approved buyback worth $1 billion. The earlier program has nearly $2 million worth of shares remaining to be repurchased.

Along with this, Kroger announced a quarterly dividend of 16.5 cents per share, payable on Jun 1, 2014 to shareholders of record on May 15, 2014.

Kroger is an asset for yield-seeking investors. The company is actively managing its capital, returning much of its free cash to shareholders via share buybacks and dividends, apart from deploying cash flows in opening stores and entry into new markets. The company has paid $928 million to shareholders through share repurchases and dividends in the last four quarters. Since Jan 2000, the company has returned about $10 billion to stakeholders via share buyback program.

Recently, Kroger posted fourth-quarter fiscal 2013 earnings of 78 cents a share that surpassed the Zacks Consensus Estimate of 73 cents, aided by its Customer 1st strategy. However, quarterly earnings fell 11% from 88 cents earned in the prior-year quarter. Additionally, total sales (including fuel center sales) decreased 4% year-over-year to $23,222 million and also fell short of the Zacks Consensus Estimate of $23,280 million.

Going forward, we believe that a predominant position among the nation's largest grocery retailers enables Kroger to sustain growth, expand store base and increase market share. It also remains well positioned to deliver higher earnings, primarily through strong super market sales growth.

Currently, Kroger's shares have a Zacks Rank #2 (Buy). Some other stocks worth considering in the retail sector include Spartan Stores Inc. SPTN, Diamond Foods, Inc. DMND and The Hain Celestial Group, Inc. HAIN. While Spartan Stores sports a Zacks Rank #1 (Strong Buy), Diamond Foods and Hain Celestial have a Zacks Rank #2.