Market Overview

Kroger Attractive Long Term, Remains On Goldman's Conviction Buy List

Share:
Kroger Attractive Long Term, Remains On Goldman's Conviction Buy List
Related KR
Barron's Picks And Pans: Broadcom, Mohawk Industries, NextEra Energy And More
Bullish Setups On Kroger, Darden, And 2 Other Stocks This Week
The Jim Carrey Parable (GuruFocus)

On September 9, Kroger Co (NYSE: KR) reported robust Q2 results, which Goldman Sachs’ Stephen Tanal believes demonstrated that the company is executing well against a difficult environment.

Tanal maintains a Buy rating on the company, while lowering the price target from $40 to $39.

Ahead Of Competition

“The company is far ahead of the competition in its use of data and is proactively investing in price as it has in each of the last 12 years in categories where it matters to drive traffic,” the analyst mentioned.

Tanal noted that management acknowledged a “pain point” for some investors by cutting the capex budget by $500 million for 2016 and 2017 from several projects that did not have critical deadlines.

Related Link: Goldman Sachs Says Sprouts Farmers Market Has "Taken Its Medicine"

The company also mentioned these funds would be reinvested in buybacks in the near term.

Attractive Long-Term Investment

“We like this move, because we think the stock is attractive at these levels as a long term investment, and we do not take issue with KR’s seemingly elevated level of capital expenditure,” the analyst stated.

Tanal pointed out that Kroger’s disciplined approach to capital allocation was evident in the company’s consistent and stable cash-on-cash returns.

“More importantly, this massive company has consistently found productive ways to deploy upwards of $4 billion annually,” the analyst went on to say, while adding that this suggested that Kroger “still has the ability to create more than $400+ million of incremental OCF annually using internally generated funds.”

Full ratings data available on Benzinga Pro.

Do you have ideas for articles/interviews you'd like to see more of on Benzinga? Please email feedback@benzinga.com with your best article ideas. One person will be randomly selected to win a $20 Amazon gift card!

Latest Ratings for KR

DateFirmActionFromTo
Jun 2018Pivotal ResearchDowngradesBuyHold
Jun 2018Credit SuisseMaintainsOutperformOutperform
Jun 2018JefferiesMaintainsBuyBuy

View More Analyst Ratings for KR
View the Latest Analyst Ratings

Posted-In: Analyst Color Earnings Long Ideas News Guidance Price Target Buybacks Analyst Ratings Best of Benzinga

 

Related Articles (KR)

View Comments and Join the Discussion!