In a report published Thursday, Deutsche Bank analyst Karen Short conducted price checks in Denver, which showed that Kroger Co (NYSE: KR) remains "very competitively" priced versus both Whole Foods Market, Inc. (NASDAQ: WFM) and Sprouts Farmers Market Inc (NASDAQ: SFM)
"These results reaffirm our view that Kroger's price/value position remains very strong, so Kroger's many competitive advantages should support sustainable growth," Short wrote. "Specifically, Kroger can react to pockets of intrusion by category (natural-organic) or by geography and the impact to Kroger's earnings power is almost undetectable."
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Kroger's price competitive ability stems from its "very" large scale, strong local market share positions, deep private brand portfolio and extensive customer loyalty program, augmented by its partnership with consumer-analysis firm Dunnhumby.
Short said that Kroger's many competitive advantages should support a sustainable sales and earnings growth for years. As such, the analyst suggested that shares should trade more in-line with other best-in-class operators and consumer staples such as Costco Wholesale Corporation and Wal-Mart Stores, Inc.
Shares remain Buy rated with a price target raised to $90 from a previous $80.
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