Shares of Kroger Co. hit a 52-week high on Tuesday after the grocery-store chain reported profit rose 16 percent, and raised its 2006 earnings guidance.
The largest traditional grocer in the U.S. said net income rose to 30 cents per share, ahead of analyst expectations of 28 cents per share. Revenue rose 5 percent to $14.7 billion.
The company also predicted 2006 earnings-per-share growth of 8 percent to 10 percent, versus a previous estimate of 6 percent to 8 percent. The new range implies earnings between $1.41 and $1.44 per share, compared to a Wall Street consensus of $1.45 per share.
Shares rose $1.57, or 7 percent, to $23.90 during morning trading on the New York Stock Exchange, after setting a new 52-week high of $24.33. The stock had traded between $18.05 and $24.15 during the past year.
Bear Stearns analyst Robert Summers, who rates Kroger "Outperform", said results indicate "operating fundamentals remain solid," since earnings, same-store sales, and gross margin all came in above expectations.
"We view the third-quarter sales performance as even more impressive than second-quarter as it came against the backdrop of more judicious pricing investment," Summers said in a research note to clients on Tuesday. "Kroger's customer-focused and value-driven philosophy appears to be resonating with customers and building longer-term customer loyalty that is not contingent on short-term price investments."
Share movement was mixed across the sector.
Safeway Inc. shares rose 31 cents to $31.78 in morning trading on the New York Stock Exchange. Also on the NYSE, Supervalu Inc. shares rose 58 cents to $34.98, after setting a new year high of $35.04. The stock's previous high of $34.75 was set in January.
Meanwhile, Pathmark Stores Inc. shares fell 4 cents to $10.95 on the Nasdaq and Great Atlantic & Pacific Tea Co. shares fell 15 cents to $27.23 on the NYSE.
Natural and organic food retailer Whole Foods Market Inc. fell 48 cents to $48.89 while Wild Oats Markets Inc. fell 7 cents to $14.90 on the Nasdaq.