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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.

Of these, value investing is easily one of the most popular ways to find great stocks in any market environment. Value investors rely on traditional forms of analysis on key valuation metrics to find stocks that they believe are undervalued, leaving room for profits.

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 stock to keep an eye on 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 11.69, which compares to its industry's average of 22.36. KR's Forward P/E has been as high as 14.46 and as low as 10.49, with a median of 12.51, all within the past year.

We also note that KR holds a PEG ratio of 1.89. 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 3.49. Over the past 52 weeks, KR's PEG has been as high as 2.83 and as low as 1.66, with a median of 2.33.

Another valuation metric that we should highlight is KR's P/B ratio of 2.66. The P/B ratio is used to compare a stock's market value with 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. Within the past 52 weeks, KR's P/B has been as high as 3.19 and as low as 2.20, with a median of 2.72.

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 0.2. This compares to its industry's average P/S of 0.23.

Finally, investors should note that KR has a P/CF ratio of 4.40. This metric takes into account a company's operating cash flow and can be used to find stocks that are undervalued based on their solid cash outlook. KR's current P/CF looks attractive when compared to 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 4.21, with a median of 4.83.

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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