Food Business News - January 26, 2016 - (Page 20)

Kroger remains Wall Street darling Recent slide aside, retailer impresses investment analysts The Best Blends We are dedicated to helping you - Develop efficient processes - Create perfect custom blends - Access the best ingredient buys - Get the highest quality products on-time and in spec Find out how by contacting us at or 1.800.227.8427 Blending Trusted Ingredient Advisors 20 FOODBUSINESS NEWS ® CINCINNATI - Together with the swooning stock market in general, shares of The Kroger Co. gave ground last week. At a mid-week low of $36.44 per share, Kroger shares were trading on the New York Stock Exchange about 15% below the company's 52-week high. While the Kroger share-price decline was in line with the 15% drop in the S.&P. 500 from its 52-week high, Kroger has maintained favor in the eyes of Wall Street analysts, particularly measured against other food retailers. Earlier in January, an analyst at Oppenheimer increased his price target for Kroger to $47 per share from $42, maintaining an outperform rating for the Cincinnati-based retailer. Kroger's U.S.-centric business model adds to the company's attractiveness to investors, Oppenheimer said. While the company's lack of exposure to non-U.S. markets may be viewed as a plus right now, it is Kroger's financial successes that have driven investor interest. In the third quarter ended Nov. 7, 2015, Kroger earnings were up 32%, adjusted for special items from the same period a year earlier. Importantly, the company raised its guidance for the full fiscal year to a range of $2.02 to $2.04 per share on the common stock, up from $1.92 to $1.98. "Kroger's consistent results demonstrate once again that our relentless focus on customers is the key to sustainable shareholder returns," said Rodney McMullen, chairman and chief executive officer. "We continue to implement our growth plan and expect to exceed our long-term net earnings per diluted share growth rate for 2015." After the earnings were issued in early December, Karen Short, an analyst with Deutsche Bank, raised her price target to $45 from $42. "Third-quarter results underscore the effectiveness of Kroger's Customer First Strategy, coupled with remarkably consecutive execution," Ms. Short said. "Kroger has entered the fourth quarter with nice momentum in what continues to be a very challenging environment for grocers." Impressive to Ms. Short has been the way Kroger has balanced profitability in a way to maintain a long-term earnings growth target of 8% to 11% per year. "This consistency, combined with a bestin-class management team and strategy, warrants a 10x multiple," she said. The company's track record has been noticed by other analysts. Edward J. Kelly of Credit Suisse, New York, called Kroger's streak of beating expectations and raising guidance "remarkable." "Kroger's top-line performance continues to stand out relative to both traditional natu natural/organic peers, which is a testament to the company's market position and its long-term strategy," he said. Other research from Credit Suisse underscored the difficult environment in which Kroger is thriving. In an early-January review of supermarket trends, Credit Suisse noted that supermarket sales decelerated in December. "Overall, industry sales have been fairly stable over the past year, growing in the 1% to 3% range, but the pronounced decline in December inflation took sales for the period below this level," Credit Suisse said. Importantly, supermarket volumes remained weak - 0.7% below the year-ago level in the period ended Dec. 26, 2015, Credit Suisse said. "The trend is lower than the prior 60-month average of flat," Credit Suisse said. At the same time overall sales trends were weak, the Credit Suisse data showed private label penetration at new recent lows. After peaking at about 20% in early 2015, private label sales were beneath 19% by December, the lowest levels since 2012. Even analysts with neutral ratings for Kroger are impressed by the company's financial results. Goldman Sachs said it is maintaining its neutral rating because the company's shares are trading at a premium to history and because upside versus consensus is limited. Still, Stephen Grambling of Goldman raised his price target to $44 from $42, acknowledging that Kroger "has ample runway ahead in its key initiatives (natural/organic, fresh, private label, prepared), all of which should be margin accretive." "Kroger continues to outpace the industry through its balanced approach across targeted price investments and service levels," he said. FBN January 26, 2016

Table of Contents for the Digital Edition of Food Business News - January 26, 2016

Food Business News -- January 26, 2016
Global turmoil clouds Unilever’s outlook
D.O.J. toughens stance on foodborne illness accountability
Dairy Business News - Competition spurring yogurt innovation
Table of Contents
Web Contents
Editorial - Food uncertainty in zero-rate era end
Jelly Belly sees opportunities in organic
Dang Foods adds onion chips to portfolio
Enjoy Life Foods on the cusp of enjoying greater growth
Bone broth debuts in a K-cup format
Brynwood Partners to acquire Sunny Delight Beverages
Krave founder in new food endeavor
A long road ahead for Chipotle
Oberto Brands to streamline operations
Hain Celestial under pressure in the U.S.
Inventure expands in frozen food
Kroger remains Wall Street darling
Wal-Mart to close 269 stores
Market Insight - Sugar intake in the spotlight
Ingredient Trends - Savory Flavors sliding into sweet applications
Ingredient Innovations - Egg replacer revelations
U.S.D.A. detects avian influenza in turkeys
New Food Products
Ingredient Market Trends - Iran likely to remain market largely lost to U.S. wheat
Ingredient Markets
Supplier Innovations and News
Ad Index
Food Business in the News

Food Business News - January 26, 2016