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Supermarket chain The Kroger Co. (KR), whose competitors include Costco Wholesale Corporation (COST) and Wal-Mart Stores, Inc. (WMT), was up over 3% at the time of this writing. At a price of $20.71, it was roughly four bucks under the 52-week high of $24.80. The volume was pretty active, indicating some conviction behind the trade. The catalyst was a Q1 earnings report. What should we make of the news?Well, according to this item, the company competently beat the projections. Kroger made 58 cents per share; Wall Street was betting on 54 cents per share. But, investors won't enjoy the following information: last year at this time, the business earned 66 cents per share. Therefore, we have a decline in the bottom line to contend with.
I wasn't too taken by this company when I reported on it back in March. Looking at the stock chart now, I can tell you I'm still not convinced. Sure, you might say that the shares are getting ready for another bounce to the upside. My argument is that there are better alternatives to be scrutinizing.
It's not that I dislike Kroger. In fact, the actual press release shows a good performance in terms of year-to-date operational cash flow. But I just don't find anything else in the document that makes me want to step up and buy. It's not the most exciting story out there. And, yes, in these turbulent times, one could say that people still need to go to the supermarket. Nevertheless, I don't see this one as being best-in-class when it comes to defensive stocks.
I'll consider revisiting Kroger. For now, I'll move on and investigate other ideas.
Disclosure: I don't own any company mentioned; positions can change without notice.
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