Positive Outlook on Potential Acquisition or No-Acquisition Scenario

  • BMO Capital upgrades Kroger’s stock
  • Kelly Bania believes a potential Albertsons deal or no deal would be positive for Kroger
  • Kroger’s stock rose 1.5% in premarket trading
  • Kroger’s positioning allows it to manage competitive environment with stable gross margin percentages
  • Bania raised her price target to $60, above the average of other analysts’ targets
  • 70% chance of no-deal scenario, 30% chance of deal happening
  • Under a no-deal scenario, Kroger’s cash-per-share could jump to $12-$13 from current $2.30
  • Kroger has beaten EPS expectations for past 17 quarters and sales expectations 11 times in that period

Kroger Co.’s stock received a boost after BMO Capital’s Kelly Bania upgraded the supermarket chain, expressing optimism about both the upcoming earnings report and the potential $24.6 billion acquisition of Albertsons Cos. Inc. Bania believes that either the deal goes through or not, it would be beneficial for Kroger. The stock has seen a 11.7% correction since reaching a two-year high on April 2. Bania’s rating upgrade to ‘outperform’ and increased price target to $60 is above the average of 18 analysts’ targets at $58.09. She sees a 70% chance of no deal and a 30% chance of a deal, with higher year-one EPS accretion under a no-deal scenario. Under such a situation, Kroger’s cash-per-share could rise to $12-$13 from the current $2.30, boosting low-double digit percentage EPS and increasing share repurchases. In the first quarter, analysts expect EPS of $1.36, net sales of $44.85 billion, and flat same-store sales. Kroger has beaten EPS expectations 17 quarters in a row and topped sales expectations 11 times during that period.

Factuality Level: 8
Factuality Justification: The article provides accurate and objective information about Kroger’s stock performance, BMO Capital’s analyst opinion, and the potential impact of the Albertsons deal on the company. It also includes relevant financial data such as earnings estimates and historical performance. The article is focused on the main topic without any significant digressions or personal opinions presented as facts.
Noise Level: 4
Noise Justification: The article provides some relevant information about Kroger’s stock performance and analyst opinions, but it is mostly focused on a single analyst’s viewpoint and speculation about a potential deal with Albertsons. It lacks in-depth analysis or exploration of long-term trends or consequences of decisions.
Public Companies: Kroger Co. (KR), Albertsons Cos. Inc. (ACI)
Key People: Kelly Bania (Analyst at BMO Capital)

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Financial Relevance: Yes
Financial Markets Impacted: Kroger Co. and Consumer Staples Select Sector SPDR ETF (XLP)
Financial Rating Justification: The article discusses the impact of Kroger’s potential deal with Albertsons on its stock price, as well as the company’s financial performance and earnings expectations.
Presence Of Extreme Event: No
Nature Of Extreme Event: No
Impact Rating Of The Extreme Event: No
Extreme Rating Justification: No extreme event mentioned in the article

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