Insiders Are Selling Kroger

Oct.14.13 | About: Kroger Co. (KR)

In this article, I will feature one grocery store that has seen intensive insider selling during the last 30 days. Intensive insider selling can be defined by the following three criteria:

  1. The stock was sold by three or more insiders within one month.
  2. The stock was not purchased by any insiders in the month of intensive selling.
  3. At least two sellers decreased their holdings by more than 10%.

The Kroger Co. (NYSE:KR) operates as a retailer in the United States. The company also manufactures and processes food for sale in its supermarkets.

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Insider selling during the last 30 days

Here is a table of Kroger's insider-trading activity during the last 30 days by insider.

Name Title Trade Date Shares Sold Rule 10b5-1 Current Ownership Decrease In Ownership
Paul Heldman EVP Sep 26 80,000 No 224,104 shares 26.3%
Lynn Marmer VP Sep 25 3,675 No 37,524 shares 8.9%
Michael Schlotman SVP Sep 23 57,250 No 156,536 shares 26.8%
Robert Clark VP Sep 19 9,000 No 36,174 shares 19.9%
Pete Williams SVP Sep 18 20,000 No 79,313 shares 20.1%
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There have been 169,925 shares sold by insiders during the last 30 days. More details about the Rule 10b5-1 trading plan can be found from this link.

Insider selling by calendar month

Here is a table of Kroger's insider-trading activity by calendar month.

Month Insider selling / shares Insider buying / shares
September 2013 169,925 0
August 2013 0 0
July 2013 226,410 0
June 2013 0 0
May 2013 0 0
April 2013 114,300 0
March 2013 266,950 0
February 2013 0 0
January 2013 0 0
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There have been 777,585 shares sold and there have been zero shares purchased by insiders this year.


Kroger reported the second-quarter financial results on September 12 with the following highlights:

Revenue $22.7 billion
Net income $317 million
Net debt $7.7 billion
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On September 12, Kroger maintained its net earnings guidance range of $2.73 to $2.80 per diluted share for fiscal 2013. This is consistent with the company's long term earnings per share growth rate guidance of 8 - 11%, plus a growing dividend.

Kroger raised identical supermarket sales, excluding fuel, growth guidance to approximately 3.0% to 3.5% for fiscal 2013. The previous guidance was 2.5% to 3.5%.


Kroger's competitors include Costco (NASDAQ:COST), Target (NYSE:TGT) and Wal-Mart (NYSE:WMT). Here is a table comparing these companies.

Company KR COST TGT WMT Industry Average (Grocery Stores)
Market Cap: 21.71B 50.61B 39.89B 243.57B 12.88B
Employees: 343,000 N/A 361,000 2,200,000 151.00K
Qtrly Rev Growth (yoy): 0.05 0.01 0.02 0.02 0.05
Revenue: 98.72B 105.16B 73.48B 473.00B 44.07B
Gross Margin: 0.21 0.13 0.30 0.25 0.13
EBITDA: 4.58B 3.92B 7.53B 36.65B 2.23B
Operating Margin: 0.03 0.03 0.07 0.06 0.03
Net Income: 1.56B 2.04B 2.71B 17.09B N/A
EPS: 3.01 4.63 4.15 5.14 2.20
P/E: 13.88 25.03 15.23 14.56 17.76
PEG (5 yr expected): 1.60 1.70 1.56 1.58 3.98
P/S: 0.21 0.48 0.54 0.51 0.34
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Kroger has the lowest P/S ratio among these four companies.

Here is a table of these competitors' insider-trading activities this year.

Company Insider buying / shares Insider selling / shares
COST 0 156,830
TGT 0 964,576
WMT 0 186,131
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Only Kroger has seen intensive insider selling during the past 30 days.


There have been five different insiders selling Kroger and there have not been any insiders buying Kroger during the past 30 days. Four of these five insiders decreased their holdings by more than 10%. Kroger has an insider ownership of 0.70%.

There are nine analyst buy ratings, three neutral ratings, and two sell ratings, with an average price target of $41.25. Kroger is trading at a P/E ratio of 13.88 and a forward P/E ratio of 13.31. Kroger has a book value of $9.39 per share and the stock has a dividend yield of 1.58%.

Before entering short Kroger, I would like to get a bearish confirmation from the Point and Figure chart. The two main reasons for the proposed short entry are bearish analyst target prices and the intensive insider selling activity.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.