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On Tuesday morning, supermarket entity The Kroger Co. (KR) reported earnings for the second quarter. Today, at the time of this writing, shares were higher by just under 1% to $21.47. Volume wasn't so great, to be honest.
I last wrote about the company back in June, when the Q1 stats were released. The price of the stock at that time was $20.71. I guess this investment idea doesn't want to do a lot of work for its shareholders. The chart seems to indicate that institutions are content with playing the stock in sideways fashion, for now at least.
As far as the earnings go, they were okay. Net income came in at 41 cents per share, two pennies higher than the year-ago period. According to our preview piece, the call on Wall Street was for 36 cents per share.
Sure, I'll give credit where credit is due. A five-penny beat is impressive. But, from a price-action perspective, I can't get behind the thesis. And the dividend yield on the stock certainly isn't high enough for these market conditions.
I just don't see Kroger being a good bet right now. There are obvious limitations to reading charts; no one can truly divine the future. Yet, I have absolutely no confidence in the way these shares are behaving. I think traders should wait for the next big pullback before establishing a position. Like I said earlier, the volume backing today's movement isn't substantial, so I don't perceive any reason to jump on the situation.
Disclosure: I don't own any company mentioned; positions can change without notice.
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