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Walmart’s Rising Tide Lifts All Grocery Stocks

Grocery store stocks are enjoying a swell, boosted by an optimistic read on prices by Walmart during its Q1 2018 earnings conference call on May 18.

For some time, the grocery store sector has been sinking under the weight of lower prices amid ever-growing competition. Walmart CFO Brett Biggs, however, said things are looking up, and stocks are already reflecting his optimism, with Kroger up by 1.43 percent and Supervalu up by 1.34 percent.

Shares of Kroger Co traded down 0.61 percent on Monday, May 15, reaching $29.34. Kroger Co insider Michael Joseph Donnelly sold 17,600 shares of the company’s stock in a transaction dated Wednesday, May 10 at an average price of $30.01, for a total value of $528,176.00.

However, several institutional investors have recently increased their position in shares of Kroger. Of several recent analyst reports, 12 issued a buy rating, 10 gave a hold rating and only one issued a sell rating, according to Petro Global News.

“The grocery business continued to improve, with food categories delivering the strongest quarterly comp sales performance in more than three years, due in part to a lack of market deflation in food, excluding price investments,” Biggs reported during the Walmart earnings call — the sentiment that sparked investors to start snapping up stocks.

“All store formats had positive comp sales,” said Biggs.

Walmart’s sales strengthened as the first quarter progressed, delivering comp sales growth of 1.4 percent, led by an increase in customer traffic of 1.5 percent. This marks the 10th consecutive quarter of positive comp traffic, according to Biggs.

Walmart continues to expand its online grocery service, now interfacing with nearly 670 locations in the U.S. The company’s online gross merchandise volume is up 69 percent from last year, including acquisitions — growth that has been almost entirely organic through Walmart.com.

“This is extraordinary growth, and we’re pleased with the traction we’re generating across our eCommerce offerings,” Biggs said. “This an exciting time to be at Walmart, and we are delivering solid results.”

Walmart completed the first quarter with an EPS of $1.00, although revenue was down by $240 million. The company looks ahead to comp sales growth of 1.5 percent to 2.5 percent in Q2.

Target is also gaining traction, with stocks up 1.20 percent Thursday, as Walmart’s numbers inspire investors.

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