Kroger smashed earnings expectations last week. At what price should you buy it?

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The Kroger Company (NYSE:KR) closed the week with an all-time high of $58.83. This came after it beat earnings expectations on both revenues and EPS. From the performance, Kroger was evidently adjusted better to the rising costs caused by inflation and supply chain challenges than all other companies. Combined with better performance guidance for this year, Kroger inspired the investors to buy more into the company.

Kroger share pullback from all-time high

Source – TradingView

Kroger stock pulled back this week, closing at $55.71 yesterday, after opening the week a high of $62.58. The pullback coincides with an RSI indicator of the company being overbought. The RSI has since then returned below 70 points. It is important to note that the RSI is still downward sloping indicating that in the next few days, the share price is likely to trend downwards. The SMA RSI 14 was recorded 61.47 with a small upward inclination. 

Our analysis indicates that an intersection between the SMA and the RSI is likely to occur around 63 points. That level would coincide with a price level of about 50. Overall, this analysis determines that KR would find support at the price of $50 before resuming an upward trend.

Summary

While Kroger is still a highly attractive investment, we think that investors interested in taking a long position should wait for the price at $50. This price is both an emotional level and technical level. Going forward, the company will still benefit from inflation-adjusted price increases even though the risks from Russia and Ukraine are on the increase.

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