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Is Kroger (KR) a Great Value Stock Right Now?

Zacks Equity Research
·3 mins read

Here at Zacks, we focus on our proven ranking system, which places an emphasis on earnings estimates and estimate revisions, to find winning stocks. But we also understand that investors develop their own strategies, so we are constantly looking at the latest trends in value, growth, and momentum to find strong companies for our readers.

Looking at the history of these trends, perhaps none is more beloved than value investing. This strategy simply looks to identify companies that are being undervalued by the broader market. Value investors use a variety of methods, including tried-and-true valuation metrics, to find these stocks.

On top of the Zacks Rank, investors can also look at our innovative Style Scores system to find stocks with specific traits. For example, value investors will want to focus on the "Value" category. Stocks with high Zacks Ranks and "A" grades for Value will be some of the highest-quality value stocks on the market today.

One company value investors might notice is Kroger (KR). KR is currently sporting a Zacks Rank of #2 (Buy) and an A for Value. The stock is trading with a P/E ratio of 13.46, which compares to its industry's average of 22.50. KR's Forward P/E has been as high as 14.46 and as low as 10.13, with a median of 12.36, all within the past year.

Investors should also note that KR holds a PEG ratio of 2.45. This popular figure is similar to the widely-used P/E ratio, but the PEG ratio also considers a company's expected EPS growth rate. KR's PEG compares to its industry's average PEG of 3.51. Within the past year, KR's PEG has been as high as 2.83 and as low as 1.56, with a median of 2.31.

Another valuation metric that we should highlight is KR's P/B ratio of 3.02. Investors use the P/B ratio to look at a stock's market value versus its book value, which is defined as total assets minus total liabilities. This stock's P/B looks solid versus its industry's average P/B of 3.61. Over the past year, KR's P/B has been as high as 3.19 and as low as 2.11, with a median of 2.67.

Value investors also frequently use the P/S ratio. This metric is found by dividing a stock's price with the company's revenue. This is a prefered metric because revenue can't really be manipulated, so sales are often a truer performance indicator. KR has a P/S ratio of 0.22. This compares to its industry's average P/S of 0.26.

Finally, investors should note that KR has a P/CF ratio of 5.26. This figure highlights a company's operating cash flow and can be used to find firms that are undervalued when considering their impressive cash outlook. This stock's P/CF looks attractive against its industry's average P/CF of 11.29. Over the past year, KR's P/CF has been as high as 5.64 and as low as 4.09, with a median of 4.89.

These are just a handful of the figures considered in Kroger's great Value grade. Still, they help show that the stock is likely being undervalued at the moment. Add this to the strength of its earnings outlook, and we can clearly see that KR is an impressive value stock right now.


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