PreMarket Prep Stock Of The Day: Kroger

Benzinga's PreMarket Prep airs every morning from 8-9 a.m. ET. During that fast-paced, highly informative hour, traders and investors tune in to get the major news of the day, the catalysts behind those moves and the corresponding price action for the upcoming session.

On any given day, the show will cover at least 20 stocks determined by co-hosts Joel Elconin and Dennis Dick along with producer Spencer Israel.

For those who don't have the time to tune in live or listen to the podcast, Benzinga will highlight one stock that merits further discussion. This analysis is not a buy or sell recommendation.

There was only one significant earnings report on Friday morning, that being Kroger KR.

Underperformer Since 2016: Kroger made its all-time high in December 2016 at $42.75 and almost matched that high in January 2016, when it peaked at $42.42. While the S&P 500 index has returned 65%, Kroger has had a negative return of 18% over the same time period.

Amazoned In October 2017: Much of the issue's decline in the issue in 2016 and 2017 can be attributed to Amazon.com AMZN, which decided to directly compete with Kroger when it made one of its rare brick \-and-mortar purchases of Whole Foods Market in June 2017.

The fallout from that transaction sent the issue to a 44-month low of $19.69.

Lows Revisited In July 2019: Kroger did stage a nice rebound off the aforementioned low, reaching $32.74 in September 2018 and reversed course. Over the next 10 months, the issue worked its way down to $20.70 and rebounded once again.

Spared During March Meltdown: Fortunately for shareholders, the issue has been categorized as a “stay at home” stock during the COVID-19 crisis. Aided by a large stake taken by Warren Buffett, the issue held up extremely well during the mayhem in March.

In fact, the issue actually posted a $1 gain in February ($26.86 to $28.13) and nearly a $2 gain in March ($28.13 to $30.12). It has extended its monthly winning streak to seven months in a row, but needs to end September above $35.68 to keep the streak intact.

Q2 Beat: Before Friday's open, the company announced an EPS beat of 18 cents along with a sales beat of $539 million. Also, the company raised its adjusted free cash flow guidance from $1.6-$1.8 billion to $2.5-$2.7 billion and announced a $1 billion buyback of its common stock.

Price Action During Coverage On The Show: Its report came out during the show, so there was live commentary on the issue. As the issue spiked higher, both hosts of the show identified its Sept. 3 high ($37,22) as a key resistance level for the issue to clear in order to sustain the rally. However, sellers stepped ahead of that level in premarket trading as the rally stalled at $36.75.

Price Action During The Regular Session: The issue relinquished most of its gain during the remainder of the premarket session and barley opened in the green at $35 versus Thursday’s close of $34.74. The open was very close to the high for the session as the issue peaked at $35.12 and reversed course.

The ensuing decline took the issue in the red by nearly a dollar declining to $33.80. It rebounded back towards the high for the session and closed at $34.37.
The discussion of the issue during today’s show can be found here: