Kroger Stock Price 2019: Potential Short Squeeze Ahead After Q2 Earnings

The Kroger Co. (KR) experienced a dip near its 52-week low following lackluster first quarter results in 2019, where revenues declined by 1.2% year-over-year. The company's pickup and delivery services have yet to significantly impact its financial performance, leading to investor skepticism and a 12% drop in stock price post-earnings. While Kroger is often viewed as recession-resistant, it remains vulnerable to economic downturns.

Wall Street forecasts remain subdued ahead of Kroger's second quarter earnings announcement on September 12, with expectations of $0.41 earnings per share on $28.4 billion in revenue. Analyst Brandon Fletcher from Bernstein expressed doubts about Kroger achieving its 2.00% to 2.25% comparable sales growth target, warning that weak results might prompt activist investors to push for strategic changes, potentially stabilizing the stock price amid selling pressure.

Kroger faces intense competition from Costco Wholesale (COST), which continues to report strong grocery sales, and from Amazon (AMZN) and Walmart (WMT), both expanding low-cost delivery options that threaten traditional supermarket sales. Additionally, margin pressures intensified in Kroger's pharmacy division following Aetna's merger with CVS Health, diminishing a key profit source.

Long-Term Stock Performance of Kroger (1992–2019)

Kroger's stock reversed a sharp downtrend in 1992 at a split-adjusted price of $1.41, climbing steadily to a peak of $17.45 in 1999. This high stood for 14 years before the stock entered a two-phase decline, bottoming near $5.50 during the 2000-2002 bear market. The mid-2000s bull market saw gains that nearly matched the 1999 peak by 2007.

The 2008 financial crisis caused a drop exceeding 30%, followed by a stable trading range between $10 and $13 until a breakout in 2012 sparked renewed buying interest. This momentum propelled Kroger to revisit the 1999 high by 2013 and surge to an all-time high of $42.75 in January 2016. However, the stock declined sharply in late 2017.

In 2018, a rebound stalled at the 50% retracement level of the prior sell-off, and a subsequent decline in 2019 erased nearly all recent gains. This volatile price action suggests a bearish outlook, with potential for the stock to test support levels around the 2017 lows and the 200-month exponential moving average—a critical long-term support zone Kroger has maintained for 17 years.

Despite recent losses, bullish momentum is emerging as the monthly stochastic oscillator has entered a buy cycle from oversold conditions, similar to patterns seen before strong rallies in 2016 and 2017. This technical strength could drive Kroger shares into the upper $20s or low $30s by year-end, provided the stock surpasses the September 2018 high of $31.59 to confirm a double bottom reversal.

Conclusion

Kroger stock is approaching key support levels established in 2017, while technical indicators point to strengthening momentum ahead of the upcoming Q2 earnings report. Combined with modest market expectations, this setup could trigger a multi-week rally, potentially squeezing short sellers and reversing the downtrend.

Disclosure: The author held no positions in Kroger or related securities at the time of writing.

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