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Pastimes : The Big Tex House of Coin -- Ignore unavailable to you. Want to Upgrade?

To: BigTex who wrote (9391)	12/11/1999 9:17:00 AM
From: Robert B.	Read Replies (1) \| Respond to of 19297

FYI, A SLOW RIDE THAT I AM BUYING THE SH*T OUT OF... Kroger (NYSE: KR) 1 and 2 year charts quote.yahoo.com quote.yahoo.com Quantitative Evaluation: Outlook (1 Lowest - 5 Highest) 4- Fair Value 27.20 Risk LOW Earn/Div Rank B+ Overview 08-DEC-99 Sales should grow 5.0% to 7.0% in FY 00 (Jan.), reflecting 4.0% to 5.0% square footage growth and same-store sales gains of approximately 2.0% above the food inflation rate. We expect profitability to improve, aided by $260 million in annualized cost savings due to the May 1999 merger with Fred Meyer. Gross margins are likely to widen, reflecting greater purchasing leverage, improved manufacturing and higher sales of private label products as KR increases private label offerings at the acquired Fred Meyer units. Operating profitability should expand due to lower overhead expenses, reflecting the elimination of redundant administrative functions and the consolidation of information systems at Fred Meyer. We expect earnings to grow 19% in FY 01 (Jan.), to $1.36, up from our operating earnings estimate of $1.14 (excluding charges) in FY 00. Valuation 08-DEC-99 We rate KR accumulate, reflecting its attractive valuation and strong earnings growth potential. While the shares, at 12X our FY 01 EPS estimate, are trading at a modest discount to peers, KR's earnings are expected to grow more quickly. We believe this discount can be attributed to investor concerns regarding the successful integration of the Fred Meyer merger. While Kroger has experienced some integration difficulty in the Phoenix region, most of Fred Meyer's operations have been successfully integrated into Kroger's operations. We view the integration problems in Phoenix as temporary, with most of the problems already resolved. In fact, most of Kroger's operations are performing well despite the large integration process with Fred Meyer. As a result, we believe Kroger shares deserve a higher valuation.