Kroger Heads Into September Earnings With Analysts Cooling and Shorts Trimming

KR enters its September 11 earnings window with a familiar tension: the Street's confidence is quietly eroding while short sellers are actually stepping back. The stock closed at $56.69 on Friday, down roughly 3.5% over the past month and nearly flat on the week — a slow grind lower that tells a more complicated story than the headline numbers suggest.

The most telling signal this week comes from the analyst community. Target prices have moved in one direction only since June — down. After a cluster of cuts following the June earnings print, Evercore ISI's Michael Montani lowered his target again this week to $75 from $78, maintaining an Outperform rating but marking his second trim in five weeks. The pattern across the Street is consistent: bulls holding their ratings but shrinking their ambitions. Morgan Stanley, Barclays, Citigroup, and UBS all cut targets in late June, and the mean has settled at $70.50 — implying roughly 24% upside from current levels, a gap that looks generous given the direction of travel. The bull case rests on the Giant Eagle acquisition, bought at what supporters describe as an inexpensive valuation with meaningful synergy potential in adjacent Midwest markets. Bears point to lackluster organic sales growth, mounting integration risk, and valuation metrics that still don't look cheap — EV/EBITDA at 6.8x and a P/E near 10.6x have drifted modestly higher over the past month even as the stock slipped.

Short positioning tells a less confrontational story than the price action might imply. SI has come down sharply — falling roughly 9% on the week to 4.1% of the free float, after running above 30 million shares earlier in August. That's a meaningful retreat. The lending market confirms the lack of urgency: borrow costs have dropped 14% on the week to just 0.36%, the lowest level in 30 days, and availability is vast — with more than twelve shares available to borrow for every one currently shorted. This is not a market pricing in a squeeze or a crowded short; it is a market where bearish conviction has been fading, not building. The ORTEX short score at 40.3 sits in the lower half of the universe and has drifted modestly lower over the past week, consistent with the unwind.

Options positioning has ticked slightly more defensive into the week's close. The put/call ratio edged up to 0.65 on Friday — about 1.3 standard deviations above its 20-day average of 0.59. That's cautious but not alarmed; the 52-week high on this measure is 0.84, so there is headroom for sentiment to deteriorate further before options traders would be signalling real distress. Peers offered little guidance this week: COST gained about 1.4% while WMT added 3%, both outperforming KR's flat week — a gap that will likely sharpen the narrative around Kroger's relative positioning heading into the fall.

One institutional note worth flagging: Wellington Management added 3.4 million shares in the quarter to June, and FMR added 3.2 million — both meaningful accumulations that suggest at least some institutional buyers see value at these levels. Berkshire Hathaway's 50-million-share position has been static since March and remains a closely watched anchor in the register.

The June earnings reaction is still fresh in the market's memory. The stock fell nearly 10% the day after that print and extended losses to over 6% across the following week — the sharpest single-day move in recent history for the name. With Q1 FY27 results due September 11, whether same-store sales trends and integration cost guidance on Giant Eagle can change the narrative around that trajectory is the central question worth monitoring.