Supermarket operator The Kroger Co. (NYSE: KR) reported its third quarter (Q3) 2020 results today, missing analyst consensus slightly on its top-line results but delivering a positive surprise in earnings per share (EPS). Kroger's shares are falling. Its $29.7 billion in revenue falls short of the $29.9 billion Zacks Equity Research reports as the Wall Street average, or a negative surprise of approximately 0.67%.

Perhaps more significantly for investors, the company's guidance predicts only slight increases in the coming months, which Bloomberg sees as an indicator the company's pandemic-driven success is reaching a plateau. Kroger altered its earlier prediction of greater than 13% whole-year identical-store sales growth to the much more specific 14%.

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Despite these potentially sour notes, Kroger's results still look solid. Revenue grew year over year by 6.3%, even if this was slightly less than Wall Street expected. Its adjusted EPS rocketed 51% compared to 2019, reaching $0.71 per share for the quarter and delivering a 7.6% positive surprise above expectations of $0.66 EPS from analysts. Digital sales jumped 108% year over year, with digital-media revenue being a particularly strong point.

CEO Rodney McMullen commented the company is "executing against our strategy even during the pandemic and [continues] to grow market share."

While grocery stores, supermarket chains, and the like have been successful in growing their overall sales during the COVID-19 outbreak, costs have kept pace and limited their profitability gains. Today's response to Kroger's results may show investors are beginning to realize this and to treat the sector's stocks more cautiously. The factor of costs in grocery stores' performance is underlined by the fact Kroger's sales grew 11.3% without fuel expenses and 6.3% once fuel is figured in.

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