Wall Street Is Eating Up This Dividend Stock. Should You Buy Shares Before They Surge as Much as 30%?

The company recorded $33.9 billion in total sales for the second quarter, matching last year’s total even as Kroger navigated the $718 million wind-down of its specialty pharmacy assets. This underlying revenue, excluding fuel and pharmacy, rose 3.8%, providing evidence of operational strength.

KR’s gross margin grew to 22.5%, up from 22.1% a year ago, thanks in part to the pharmacy sale, lower supply chain costs, and reduced shrinkage, partly offset by the mix effect from pharmacy growth and targeted price investments. The net total debt to adjusted EBITDA ratio is now 1.63, comfortable and below Kroger’s 2.3 to 2.5 target range. This represents prudent financial management. Kroger is acting on a $5 billion accelerated share repurchase, set to finish by Q3 2025, with $2.5 billion authorized for open market buybacks through the end of the year.

Kroger’s story this season is all about setting new standards in wellness and retail convenience. On Sept. 17, the company debuted its Simple Truth Protein line, the largest expansion yet for Simple Truth, offering shoppers 80-plus choices that cover breakfast, lunch, snacks, and dessert. Each product comes “free from” artificial colors, flavors, and preservatives, appealing to the growing number of customers focused on nutrition and ingredient transparency.

Adding to the fresh momentum is Kroger’s entrance into the premium beauty and wellness segment. The retailer is forging exclusive partnerships with international brands Nude by Nature and COSRX, setting the stage for a broader reach and more competitive edge in higher-margin categories that have shown resilience across economic cycles.

Kroger is also making changes behind the scenes. Plans announced in June 2025 call for closing approximately 60 underperforming stores over 18 months. The company is reinvesting in 30 major renovation projects slated for completion by year’s end. This strategic overhaul is backed by lessons learned from the paused Albertsons (ACI) merger and aims to streamline operations while optimizing assets.

Kroger continues to draw strong attention from Wall Street analysts, and recent earnings guidance only strengthens that narrative. For the current quarter ending October 2025, the average earnings estimate stands at $1.04 per share. That’s a clear uptick from $0.98 a year earlier and shows that analysts are building in expectations of progress.

Moving to the full fiscal year ending January 2026, forecasts climb to $4.79, well above the prior year’s $4.47 mark. The next year, fiscal 2027, brings another bump in consensus earnings, rising to $5.26, compared to $4.79 in the preceding period. Growth rate estimates stand at 6.12% year-over-year (YoY) for the third quarter, 7.16% for the next fiscal cycle, and 9.81% into 2027.

Those steady numbers are winning over analyst opinion. All 21 surveyed analysts are on board with a “Moderate Buy” consensus, signaling widespread agreement that positive momentum can keep pushing shares higher. The average price target from this group lands at $77.65, pointing to about an 18.4% potential gain from the current price point.

If the question is whether Kroger is worth a spot before the next surge, the answer is straightforward. Kroger’s story is compelling for those after both income and growth. Strong earnings support, increasing dividends, and confident analyst targets put the odds in favor of further upside. Fundamentals and sentiment are working together, and shares look ready to grind higher as Wall Street turns increasingly bullish. Roth MKM’s recent upgrade underscores this growing optimism and lifts expectations for what comes next. The direction ahead seems positive, with a real chance at that $85 target if current momentum continues. Buying now stacks the odds toward potential gains, as Kroger’s momentum shows every sign of lasting.

On the date of publication, Ebube Jones did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. This article was originally published on Barchart.com