Kroger’s Stock (KR) Finely Balanced Ahead of Earnings: What to Expect

Kroger Co's stock price (NYSE: KR) appears finely balanced ahead of earnings, with the current $66.50 level in pre-market almost exactly at the mid-point of the 52 week range.

The grocery giant is set to announce its latest earnings before market open, with the street expectations pegged at an Earnings Per Share (EPS) of $1.03 and revenue of $34.18 billion. Should these marks be hit, it would reflect a year-over-year EPS growth of 5.1%, and a sales growth of 1.62%.

Kroger's stock has experienced notable volatility in the past year, fluctuating between a low of $57.69 and a high of $74.90. The current price hovers near its 50-day Simple Moving Average (SMA) of $66.07 but remains below the 200-day SMA of $67.42, suggesting potential resistance at that higher level. This technical positioning underscores the uncertainty surrounding the stock's near-term trajectory into earnings. A positive break to the upside could trigger further bullish sentiment, whilst a disappointing print could see the stock look to retest support.

Recent strategic decisions have added complexity to the earnings outlook. Kroger's November announcement to close three automated delivery fulfillment centers in Wisconsin, Maryland, and Florida by January 2026 will result in a $2.6 billion impairment charge in the third quarter. This move is part of a broader initiative to improve e-commerce profitability by an estimated $400 million in fiscal year 2026. The company aims to achieve this by strengthening partnerships with third-party delivery services like Instacart, DoorDash, and Uber Eats.

The closure of these fulfillment centers has also impacted Kroger's technology partner, Ocado. Ocado's shares fell by 20% following the announcement, with analysts projecting a $50 million reduction in Ocado's fee revenue for the next fiscal year. This development has raised concerns about Ocado's growth prospects in the U.S. market, potentially affecting Kroger's long-term technology strategy.

Despite these challenges, Kroger's stock has demonstrated resilience. In July it reached an all-time high of $74.90, and has added 10.5% over the past 12 months. Furthermore, the company has maintained a consistent dividend payment for 20 consecutive years, currently yielding ~2%, appealing to income-focused investors.

Options data indicates an implied volatility of 31.47% for KR, suggesting an expected price move of approximately 4.98% into the end of the week. This translates to a potential trading range between $63.93 and $70.63 in the near term.

Given the mixed signals; with the impairment charge, the impact on Ocado, but also the strong historical performance and share buyback program, the market's reaction to Kroger's earnings this week is highly uncertain.