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

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Here at Zacks, our focus is on the proven Zacks Rank system, which emphasizes earnings estimates and estimate revisions to find great stocks. Nevertheless, we are always paying attention to the latest value, growth, and momentum trends to underscore strong picks.

Of these, value investing is easily one of the most popular ways to find great stocks in any market environment. Value investors use a variety of methods, including tried-and-true valuation metrics, to find these stocks.

Luckily, Zacks has developed its own Style Scores system in an effort to find stocks with specific traits. Value investors will be interested in the system's "Value" category. Stocks with both "A" grades in the Value category and high Zacks Ranks are among the strongest value stocks on the market right now.

Kroger (KR) is a stock many investors are watching right now. KR is currently sporting a Zacks Rank of #2 (Buy), as well as a Value grade of A. The stock holds a P/E ratio of 13.74, while its industry has an average P/E of 22.54. Over the past year, KR's Forward P/E has been as high as 14.32 and as low as 9.88, with a median of 12.57.

We also note that KR holds a PEG ratio of 1.62. 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 3.14. KR's PEG has been as high as 2.48 and as low as 1.43, with a median of 1.95, all within the past year.

We should also highlight that KR has a P/B ratio of 3.47. 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 company's current P/B looks solid when compared to its industry's average P/B of 4.02. Over the past year, KR's P/B has been as high as 3.48 and as low as 2.36, with a median of 2.79.

Value investors also frequently use the P/S ratio. This metric is found by dividing a stock's price with the company's revenue. Some people prefer this metric because sales are harder to manipulate on an income statement. This means it could be a truer performance indicator. KR has a P/S ratio of 0.25. This compares to its industry's average P/S of 0.31.

Finally, our model also underscores that KR has a P/CF ratio of 6.61. This data point considers a firm's operating cash flow and is frequently used to find companies that are undervalued when considering their solid cash outlook. KR's current P/CF looks attractive when compared to its industry's average P/CF of 13.62. Over the past 52 weeks, KR's P/CF has been as high as 6.64 and as low as 3.49, with a median of 4.54.

These figures are just a handful of the metrics value investors tend to look at, but they help show that Kroger is likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, KR feels like a great value stock at the moment.


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