Kroger (NYSE: KR) is one of the nation's largest retail grocery chains. It operates nearly 2,500 supermarkets and multi-department stores in 31 states, under such local banners as Kroger, Ralphs, Fred Meyer, Fry's, Dillons, QFC and City Market. The firm also operates about 778 convenience stores, 392 fine jewelry stores, 723 supermarket fuel centers and 41 food processing plants. Despite diversification moves, Kroger food stores still account for about 85 percent of sales. Wal-Mart (NYSE: WMT) and Safeway (NYSE: SWY) are major competitors.

The firm pleased investors last week, when it reported fiscal Q1 EPS of 58 cents and revenues of $23.11 billion. Analysts had been expecting 55 cents and $22.32 billion. The EPS figure was a company record. Management also offered in-line guidance for FY09 earnings and said that about $643.6 million remained under the $1 billion stock repurchase program announced in January.

KR shares popped on the news and then began defining a bullish "flag" consolidation pattern. Stocks often leave flags moving in the same direction they were traveling on entry. In this case, that would be to the upside.

Brokers recommend the issue with three "strong buys", five "buys", two "holds" and one "underperform". The KR P/E ratio (15.86), Price to Sales ratio (0.26), Price to Book ratio (3.76), Price to Cash Flow ratio (7.15), EPS Growth rate (23.28%) and Return on Equity (24.04%) compare favorably with industry, sector and S&P 500 averages. Institutional investors hold about 83% of the outstanding shares. The stock is one of those used to calculate the S&P 500 Index. Over the past 52 weeks, it has traded between $23.39 and $30.00. A stop-loss of $24.90 looks good here.

Larry Schutts is a contributing editor for Theflyonthewall.com and the Vice-President of Stockwinners.com. He does not hold positions in any of the stocks mentioned above.