Kroger Co. (KR), the largest U.S. supermarket chain, rose the most in two years after saying profit this year will be more than previously forecast, helped by increased sales from the purchase of Harris Teeter.
The shares climbed 5.1 percent to $49.66 at the close in New York for the biggest gain since June 2012. The shares have gained 26 percent this year, compared with a 6 percent increase for the Standard & Poor’s 500 Index.
Kroger has boosted sales with its purchase of the Harris Teeter grocery chain earlier this year and by selling more organic food, contributing to a first-quarter profit that topped analysts’ estimates. The company’s Simple Truth line of natural fare, which the company has said may be a billion-dollar brand in less than two years, has helped it win customers from Whole Foods Market Inc. (WFM) and Sprouts Farmers Market Inc.
“They continued to take a lot of market share,” Andy Wolf, an analyst at BB&T Capital Markets, said in an interview. “They have very ambitious goals in natural foods.”
Wolf recommends buying the shares.
Profit per share in the year through January may be $3.19 to $3.27, up from a previous forecast of $3.14 to $3.25, the Cincinnati-based company said today in a statement. The average of 24 analysts’ estimates is $3.22.
Net income in the three months ended May 24 advanced 4.2 percent to $501 million, or 98 cents a share, from $481 million, or 92 cents, a year earlier. Excluding certain items, profit was $1.09 a share. Analysts estimated $1.05, according to the average of 19 projections compiled by Bloomberg.
Sales rose 10 percent to $33 billion, surpassing estimates.
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