Jefferies Says Kroger Shares Could Peak This Quarter, Sees 'Subpar' 2015 Growth

In a report published Wednesday, Jefferies analyst Mark Wiltamuth commented that Kroger Co (NYSE: KR) is expected to post earnings per share upside of $0.96 (versus consensus estimate of $0.90) driven by higher fuel margins, in its fourth quarter report scheduled to be released on March 5 before market open.

Wiltamuth added that core grocery identical store sales growth should be "healthy" at an estimated 4.5 percent as consumers have more spending power from lower gas prices and also driven by loyalty card offers and double-digit growth in natural and organics.

However, Wiltamuth cautioned that 2015 guidance could come in "a bit light" due to tough year-over-year comparisons for both fuel sales and margins and that management already acknowledged that the second and third quarters are likely to experience fuel margin headwinds.

Bottom line, Wiltamuth stated that this quarter could be a peak for the stock and that the company will face difficulties in achieving its 8 percent to 11 percent long-term earnings per share growth guidance for the upcoming year as the analyst is projecting only a 7 percent earnings per share growth.

Shares are Hold rated with a price target raised to $67 from a previous $66.