BUSINESS

Entrepreneurs are conditioned to ask how big they can make their companies. But until you define what you truly want your business to make possible, every milestone simply creates another one.

It’s one more hoop to jump through for candidates looking for entry-level work.

When Kroger removed Red Bull from all of its grocery stores and gas stations, that seemed like an isolated dispute over price with one brand.

Even when the grocery chain pulled another brand, Boar’s Head, from about 200 locations, it still seemed like a small issue. In those stores, however, a sign appeared, which explained the situation.

“A bright yellow sign reads: ‘Boar’s Head products will no longer be offered at this location. We continue to provide a variety of high quality deli meats and cheeses, including many customer favorites from our premium deli selection,’” reported WCPO.

Neither company would explain why the change was being made, but industry analysts told the news station price might be the issue.

“Kroger recently raised the price of some of its Boar’s Head meats — such as Oven Roasted or Maple Honey Turkey — to $14.99 a pound. Kroger’s Private Selection versions are often $10.99 a pound, significantly less,” the local news station shared.

Kroger CEO Gregory Foran shared during the chain’s second-quarter earnings call that these are not necessarily isolated changes.

Kroger wants to hold the line on prices

Robbie Ohmes with Bank of America asked Foran about the impact of inflation on grocery chains.

“As I see what is happening, particularly with gas prices, diesel prices, you know, historically, when you get an environment like this, you see it start to flow through,” he said.

He noted that Kroger has “a lot of active work underway at the moment in terms of cost savings. You know, some of that is built around what we call our COGS (cost-of-goods-sold).

Foran made it clear that the company wasn’t doing that just to have to raise prices for other reasons.

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“What we wanna do is make sure that the great work that is happening in that area just is not if you like, frittered away as we then have to deal with price increases. So there is you know, some really good work that the teams are doing in this area, but I would expect that pressure is actually going to mount,” he said.

Foran didn’t exactly threaten vendors, but his words, plus Red Bull and Boar’s Head removals, provide a clearer picture of how Kroger is responding when suppliers seek higher prices

He also shared how the chain might replace some of those products.

Kroger has been working to cut costs in order to lower some prices.Shutterstock

Kroger expanding its house brand

In some cases, the Boar’s Head products were replaced with Kroger house brand deli meat. That’s something the chain intends to do more of.

“Looking ahead, we are also expanding SmartWay, our opening price point brand. With more items, broader coverage across the store, and improved visibility both in store and online,” Foran said.

Consumers, of course, might show loyalty to brands such as Red Bull and Boar’s Head. Kroger, however, is giving itself more alternatives when negotiations with national brands break down.

Kroger is making a large bet on its entry-level private label brand.

“You are seeing us expand our range of SmartWay products there, you know, circa from about 130, we will get that up to 1 thousand over the next year and a bit. Some of those are already hitting the shelves, and we are very pleased with how they both look and taste and feel,” he added.

Kroger, it should be noted, did not hide that the dispute with Red Bull is over cost.

“We are currently out of stock while we work with our suppliers to keep prices affordable for you,” reads a sign hanging where the energy drink is normally shelved, WCPO reported.

Kroger’s betting on prices over brand loyalty

RTM Nexus CEO Dominick Miserandino thinks consumers have a breaking point when it comes to price.

“For a lot of everyday products, the brand name matters less when the price difference gets big enough. Kroger has a real opportunity with its house brands, especially with shoppers watching every grocery dollar,” he told TheStreet.

That’s not a strategy that will work across all products.

“The risk is assuming that applies to every category. There are still products where shoppers want their brand, and they’ll go somewhere else to get them,” he added.

Miserandino, in an earlier interview with TheStreet, thinks that Kroger is going to hold the line on raising some prices.

“Kroger pulling Red Bull off the shelves comes down to basic shelf math. Red Bull wants to raise wholesale prices, and Kroger refuses to pay it,” he said.

As a Red Bull drinker, I’ll share that unless Kroger sampled a house brand knock-off, I’d likely simply buy the brand elsewhere, but it makes sense to have a fight over an energy drink because I’m probably not changing grocery stores over the lack of Red Bull.

I would also appreciate house brands in areas where I’m less particular.

GlobalData Managing Director Neil Saunders thinks private labels are broadly a smart play for grocery chains.

“The investments have certainly been worth it for grocers. They’ll probably push on it even harder,” he told The Washington Post.

ALSO READ: Kroger pulls a gas perk as pump prices set a September record

Bank of America wants investors who are looking at the stock market through a political lens to ‘follow the profits’. 

In an analysis stretching back to 1936, the bank found a bigger divide between winning S&P 500 years based on earnings growth than on which party held the White House.

Political headlines offer plenty of reasons to feel bullish or bearish. Tariffs, taxes, and spending decisions can change the outlook for businesses, making Washington difficult for investors to ignore.

But the party in power tells only part of the story.

BofA’s comparison refocuses on what companies earn, a less dramatic subject that can get buried beneath the daily political noise.

For investors deciding what deserves their attention, the findings offer an excellent starting point.

BofA’s 68% finding puts earnings at the center of the market debate

Bank of America’s argument comes down to a striking gap.

According to the bank, earnings effectively separate winning stock market years much more sharply than political affiliation does.

As reported by Seeking Alpha, going back to 1936, BofA found that 68% of positive S&P 500 years coincided with rising earnings per share, while 32% coincided with falling earnings per share. The political split was considerably narrower: 54% under Democrats and 46% under Republicans.

That gives the earnings comparison a 36-percentage-point spread, versus eight points for party affiliation. However, these are shares of winning years, not the probability that stocks will rise under either condition. 

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That said, the stock market enters this debate with substantial gains. Through September 25, the S&P 500 was up 13.12% this year, 5.25% over three months, and 17.47% over six months, according to Yahoo Finance data. Its rebound from March’s low left it less than 1% below August’s high.

Next comes the Nov. 3, 2026, midterm election.

Historically, that calendar has challenged investors. From 1945 through 2025, midterm years averaged S&P 500 price gains of 3.8%, versus 10.9% in other years, according to J.P. Morgan Wealth Management. Yet fourth quarters averaged a 6.4% gain.

This year has already outpaced that full-year midterm average. 

BofA’s takeaway puts the next test squarely on corporate results, in that whether profits can support further gains as investors weigh what the election could mean for taxes, spending, and business costs.

S&P 500 earnings crushed forecasts, but the gains need unpacking

Corporate earnings give BofA’s argument strong backing.

By Aug. 28, FactSet’s Q2 earnings growth tally stood at 52%. Some 86% of S&P 500 companies beat profit expectations, with aggregate earnings exceeding estimates by 26.5%.

AI and cloud demand helped drive technology’s strength. However, investment gains at Alphabet (GOOGL)  and Amazon (AMZN) inflated headline profits, making the surge look stronger than operating performance alone would suggest.

Still, the strength extended beyond those giants. 

Companies outside the Magnificent Seven posted blended earnings growth of 31.8%, their strongest showing since late 2021. That breadth gives the earnings story a lot more substance.

Q3 is mostly an expectations story so far. As of Sept. 25, analysts projected 29.1% earnings growth, up from 26.7% on June 30. Seven of the first nine reporting companies had beaten EPS estimates.

The drivers are revealing.

Energy earnings estimates rose 18% as oil climbed, while technology estimates increased 4.1%, led by AI giant Nvidia. Higher energy profits, however, can coexist with greater pressure on consumers.

Meanwhile, 72 companies issued above-consensus EPS guidance, versus 44 below consensus. The positive share, 62%, comfortably exceeded its five-year average of 41%.

Bank of America finds earnings matter more than politics for stock gains.Michael M. Santiago / Getty Images

Investors should buy earnings durability, not just earnings beats

BofA’s findings favor keeping investment decisions linked to profits. But the price paid for those profits still determines how much room investors have for disappointment.

As of Sept. 25, the S&P 500 traded at 19.2 times forward earnings, below its five-year average of 19.8 but above its ten-year average of 19.0. That suggests a reasonable valuation relative to recent history, but it’s far from being an obvious bargain.

The catch is that forward valuations depend on forecasts holding up. For example, a 10% reduction in expected earnings would push that multiple to roughly 21.3 with unchanged stock prices.

For diversified investors, this supports maintaining core exposure while spreading new purchases over time. Rebalancing oversized tech positions can also reduce dependence on a handful of earnings reports.

When selecting individual stocks, prioritize operating income, cash generation, and management’s guidance. Alphabet and Amazon’s investment gains show why headline EPS alone can exaggerate underlying momentum.

Q3’s projected 29.1% earnings growth sets a demanding benchmark. Paying a premium makes more sense when recurring revenue and cash flow support it.

Use earnings season to test those assumptions.

Consider adding after price declines when business prospects remain intact, and reassess holdings when guidance weakens enough to undermine the valuation.

Related: Jim Cramer warns stock market investors who have big gains

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