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What you need to know
- Kroger will report its third quarter results on Thursday, while the proposed merger between Albertsons and Kroger remains in legal uncertainty.
- Analysts expect higher sales and profits than a year ago, though the average price target suggests analysts expect Kroger's stock to decline from recent highs.
- The grocery chains and the FTC gave closing arguments in September in the trial over the commission's attempts to block the merger on anticompetitive grounds.
The Kroger Co. will report its third-quarter earnings ahead of the opening of the markets on Thursday. Meanwhile, the company is awaiting the Federal Trade Commission’s (FTC’s) decision regarding the legal challenge brought by the FTC against the merger proposed between Albertsons Companies (ACI).
Analysts have a cautious view of Kroger's stock, with the 10 analysts tracked by Visible Alpha split between four "buy" ratings and six "hold" ratings. However, the average target price of $58.80 suggest analysts see room for Kroger's stock to continue coming down from last Friday's closing level of $61.08, its highest close in more than two years.
Kroger’s shares fell 1.6% on Monday to $60.11 but have still risen over 30% from the beginning of this year.
According to Visible Alpha’s estimates, the supermarket chain will report revenues of $34.23 Billion, an increase of 0.8% over last year, with a profit that is 2.6% more at $662.60 million.
Kroger, Albertsons Await Legal Decision
Kroger has been awaiting the outcome of the FTC trial to try and block its proposed merger with Albertsons. Kroger continues to announce that it anticipates a merger closing in the fourth-quarter of the year.
The commission presented their closing arguments in September as it argued that the merger could harm both workers and consumers. It was stated by the agency that if Kroger and Albertsons merged, they would not lower prices nor raise wages as a way to compete.
Nevertheless, both companies claim that merging allows them to compete more effectively with their larger rivals, such as Walmart (WMT) or Costco Wholesale(COST), in addition to Amazon’s growing grocery business (AMZN). According to the FTC, these comparisons were incorrect. Kroger and Albertsons are better compared with other local grocery stores than online or membership retailers.
Rod McMullen, Kroger’s Chief Executive Officer and CEO (CEO), said in the last quarter earnings report that Kroger is a “competitive company”. “confident in the facts and the strength of our position.” Kroger has also stated that positive consumer trends are being observed and they will continue to be seen in the second halves of 2024.
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