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Grocery chain Kroger Co (NYSE:KR) is scheduled to report second-quarter results Sept. 12, and a poor performance could result in an activist investor taking interest in the name, according to Bernstein.
The Analyst
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Brandon Fletcher maintained an Outperform rating on Kroger.
The Thesis
The Street has a "generally low" outlook for Kroger, with the Street calling for comps to rise 1.6%, while Bernstein's estimates are higher at 2%, Fletcher said in a note. (See his track record here.)
If the company's report falls near the Street's estimate, it will make Kroger's annual guidance of 2% to 2.5% annual growth more "challenging," as first quarter comps came in at 1.5%, the analyst said.
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Kroger could see some benefits from stabilizing operating margins, as the Consume Price Index offers some "continued relief," while alternative revenue streams contribute more, he said.
If the grocery chain disappoints versus the already low bar or the stock shows an overreaction to "lukewarm results," activist investors could take advantage, Fletcher said.
An activist investor could be tempted to "make a move" and not only offer downside protection to the stock, but upside potential "well above" current levels, the analyst said.
Price Action
Kroger shares were up 2.19% at $24.53 at the time of publication Wednesday.
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Crypto Whales Are Loading Up — Are You?
New research shows the biggest crypto buyers are back. And this time? They could hold for the possibility that Bitcoin will surpass $100,000 in 2024. You don’t want to miss the next massive crypto bull run like we saw in 2020 and 2021. To know exactly what’s going on and what to buy… Get Access To Benzinga’s Best Crypto Research and Investments For Only $1.