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Kroger stock named value pick of the day by analyst
Shoppers aren't the only ones who are finding value at Kroger Co. Investors are getting a deal, too, by buying the stock.
At least that's the opinion of Zacks Investment Research Inc. The Chicago-based firm selected Kroger (NYSE: KR) as its value pick of the day Monday.
Zacks lifted its short-term rating for Kroger to its No. 1 (Strong Buy) rating March 6. Those ratings, which provide outlooks for the next one to three months, have a powerful track record. Zacks No. 1-ranked stocks have gained 26.8 percent a year since 1988. The S&P 500 rose 9.4 percent.
Zacks also upgraded its long-term recommendation on Kroger from "neutral" to "outperform." That opinion is intended to cover investors' time horizons of six months and beyond.
Kroger's stock is trading at 10.5 times this year's earnings estimate. That's slightly cheaper than the rest of its industry, Zacks analyst Brian Bolan wrote in a recent report.
Beyond that, analysts have lifted their earnings estimates for this year from $2.21 a share two months ago to $2.33 now. Kroger's stock tends to follow analysts' estimates, Bolan said.
"So value investors would probably do well to buy shares of (Kroger)," he wrote.
The other key for Zacks is whether companies steadily beat those estimates. Kroger has scored well in that category, too, topping predictions in five of the past seven quarters.
Kroger stock gained 7 cents, or 0.3 percent, in mid-afternoon trading Monday to $24.39. It has inched up by less than 1 percent so far this year.