The earnings pickings are getting mighty slim, with just three S&P 500 companies – Novell, Inc. (NASDAQ: NOVL), Big Lots, Inc. (NYSE: BIG)? and The Kroger Co. (NYSE: KR) – on the schedule this week. Being the major grocer in our neck of the woods, we’re going to take a look at Kroger, which reports Thursday before the bell, for today’s earnings trade. 

Analysts expect KR to come in at 31 cent to 32 cents per share, a modest increase from a year ago. The whisper number is the same. KR usually does pretty well with its earnings reports, having missed just twice in the past five years. 

The common theme with traditional grocers is that they’re sagging under the weight of higher food prices and fierce competition from the Wal-Marts and Targets of the world. While that theory certainly has plenty of merit, grocers such as KR aren’t exactly standing still. For example, Safeway Inc. (NYSE: SWY) beat its earnings estimate in October, and the stock enjoyed a solid three-week rally after reporting.

KR has aggressively cut prices to compete with the deep-discount stores (we know this because we’re in Kroger at least once per week). At the same time, it’s encouraging to note that Safeway reported a better pricing environment moving forward. So there’s hope for improving margins looking ahead.

KR’s chart is also encouraging. The stock is up around 14% off the late-August low. In contrast, Wal-Mart Stores, Inc. (NYSE: WMT) is up only around 6% in the same time frame. KR has been riding along its 20-day moving average, which has kept the shares pointing higher for more than a month.

Sentiment toward KR is mixed with short interest low and the put/call ratio in the middle of its annual range. Analysts are all over the map, with nine “buys,” five “holds” and two “sells.” So there’s plenty of pessimism to unwind.

KR is far from a screaming buy. But with expectations for traditional grocers so low and some post-earnings success among competitors on the books, KR’s prospects are better than average. 

Take a flyer on KR Dec 22 Calls, which are currently trading for $1.20.