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

Zacks Equity Research
·3 min 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.

Of these, value investing is easily one of the most popular ways to find great stocks in any market environment. Value investors use tried-and-true metrics and fundamental analysis to find companies that they believe are undervalued at their current share price levels.

In addition to the Zacks Rank, investors looking for stocks with specific traits can utilize our Style Scores system. Of course, value investors will be most interested in the system's "Value" category. Stocks with "A" grades for Value and high Zacks Ranks are among the best value stocks available at any given moment.

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 has a Forward P/E ratio of 11.99. This compares to its industry's average Forward P/E of 22.30. Over the past 52 weeks, KR's Forward P/E has been as high as 14.46 and as low as 10.49, with a median of 12.51.

We also note that KR holds a PEG ratio of 1.94. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. KR's industry currently sports an average PEG of 3.48. Within the past year, KR's PEG has been as high as 2.83 and as low as 1.66, with a median of 2.33.

We should also highlight that KR has a P/B ratio of 2.70. 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 attractive against its industry's average P/B of 3.61. Over the past 12 months, KR's P/B has been as high as 3.19 and as low as 2.20, with a median of 2.72.

Finally, investors should note that KR has a P/CF ratio of 4.48. This metric focuses on a firm's operating cash flow and is often used to find stocks that are undervalued based on the strength of their cash outlook. This company's current P/CF looks solid when compared to its industry's average P/CF of 11.29. Within the past 12 months, KR's P/CF has been as high as 5.64 and as low as 4.21, with a median of 4.83.

These are only a few of the key metrics included in Kroger's strong Value grade, but they help show that the stock is likely undervalued right now. When factoring in the strength of its earnings outlook, KR looks like an impressive value stock at the moment.


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Zacks Investment Research