After witnessing a negative earnings surprise in the second quarter of fiscal 2017,The Kroger Co. (KR – Free Report) made a sharp comeback in the third quarter. The grocery retailer posted earnings of 44 cents a share that beat the Zacks Consensus Estimate of 40 cents and increased 7.3% from the prior-year quarter. As a result, shares are up nearly 10% during pre-market trading hours.

Nevertheless, management reiterated its fiscal 2017 adjusted earnings guidance of $2.00-$2.05 per share. The current Zacks Consensus Estimate for fiscal 2017 is pegged at $1.97.

Total sales grew 4.5% to $27,749 million from the prior-year quarter and also came ahead of the Zacks Consensus Estimate of $27,307 million, marking the fifth straight quarter of revenue beat. Excluding fuel center sales, total sales rose 3%. Digital revenue surged 109% on the back of ClickList.

Kroger has been trying all kinds of devices to overcome stiff competition, which has intensified with the entrance of Amazon (AMZN – Free Report) , volatility in food prices, an aggressive promotional environment and waning store traffic. A dominant position among the nation’s largest grocery retailers enables it to boost market share by expanding store base, introducing new items, digital coupons, and order online, pick up in store initiative.

The company’s “Restock Kroger” program is reaping results. Kroger commenced “We Are Local” campaign; launched and opened a new restaurant concept, Kitchen 1883; and added two new product lines under “Our Brands”. The company is also passing the benefit of cost containment to customers by lowering prices and launched home delivery in select locations in Southern California in collaboration with Instacart.

Kroger Company (The) Price, Consensus and EPS Surprise

Kroger Company (The) Price, Consensus and EPS Surprise | Kroger Company (The) Quote

These endeavors have helped the shares of Kroger to surge 17.8% in a month compared with the industry that gained 11.7%. We believe that the company’s operational strategies present enormous opportunities to augment identical supermarket sales and enhance return on invested capital.