Kroger Company (KR) AI Stock Analysis

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Kroger Company

(NYSE:KR)

Rating:68Neutral

Price Target:

$73.00

▲(8.91% Upside)

Kroger's overall stock score is driven by strong earnings call performance and stable financials, despite high leverage and modest growth. Technical analysis indicates bearish momentum, which tempers the score. Valuation is reasonable but not particularly attractive, given the current market conditions.

Positive Factors

E-commerce Growth

The significant growth in e-commerce sales indicates a strong adaptation to consumer trends, enhancing Kroger's competitive position in the digital retail space.

Private Label Performance

Consistent growth of private label products suggests strong brand loyalty and higher margins, contributing positively to Kroger's profitability.

Strategic Investments

Strategic investments in customer experience and cost reduction can enhance operational efficiency and long-term market competitiveness.

Negative Factors

High Leverage

Significant leverage increases financial risk, potentially limiting Kroger's ability to invest in growth opportunities and weather economic downturns.

Store Closures

Store closures indicate challenges in certain markets, which may impact revenue and market presence if not offset by growth in other areas.

E-commerce Profitability Challenges

While e-commerce growth is positive, the lack of profitability in this segment could strain resources and delay returns on investment.

Kroger Company (KR) vs. SPDR S&P 500 ETF (SPY)

Market Cap

$44.32B

Dividend Yield1.95%

Average Volume (3M)6.79M

Price to Earnings (P/E)18.2

Beta (1Y)>-0.01

Revenue Growth-2.11%

EPS Growth25.03%

CountryUS

Employees409,000

SectorConsumer Defensive

Sector Strength44

IndustryGrocery Stores

Share Statistics

EPS (TTM)1.04

Shares Outstanding661,155,800

10 Day Avg. Volume7,068,497

30 Day Avg. Volume6,793,474

Financial Highlights & Ratios

PEG RatioN/A

Price to Book (P/B)N/A

Price to Sales (P/S)N/A

P/FCF RatioN/A

Enterprise Value/Market Cap1.46

Enterprise Value/Revenue0.44

Enterprise Value/Gross Profit2.13

Enterprise Value/Ebitda8.34

Forecast

1Y Price Target

$76.47

Price Target Upside14.08% Upside

Rating ConsensusModerate Buy

Number of Analyst Covering18

Kroger Company Business Overview & Revenue Model

Company DescriptionThe Kroger Co. operates as a retailer in the United States. The company operates combination food and drug stores, multi-department stores, marketplace stores, and price impact warehouses. Its combination food and drug stores offer natural food and organic sections, pharmacies, general merchandise, pet centers, fresh seafood, and organic produce; and multi-department stores provide apparel, home fashion and furnishings, outdoor living, electronics, automotive products, and toys. The company's marketplace stores offer full-service grocery, pharmacy, health and beauty care, and perishable goods, as well as general merchandise, including apparel, home goods, and toys; and price impact warehouse stores provide grocery, and health and beauty care items, as well as meat, dairy, baked goods, and fresh produce items. It also manufactures and processes food products for sale in its supermarkets and online; and sells fuel through 1,613 fuel centers. As of January 29, 2022, the company operated 2,726 supermarkets under various banner names in 35 states and the District of Columbia. The Kroger Co. was founded in 1883 and is based in Cincinnati, Ohio.

How the Company Makes MoneyKroger generates revenue primarily through the sale of food and grocery items, which includes fresh produce, meat, dairy products, and canned goods. The company operates on a low-margin, high-volume business model, where it sells a large volume of products at competitive prices. Key revenue streams include in-store sales, online grocery orders, and pharmacy services. Additionally, Kroger earns income through its private label products, which typically have higher margins than national brands. The company also benefits from pharmacy sales, fuel centers, and partnerships with third-party vendors for advertising and promotions, contributing to its overall earnings.

Kroger Company Key Performance Indicators (KPIs)

Any

Store Count

Store Count
Indicates the total number of retail locations, highlighting the company's market reach and potential for customer engagement. A growing store count can signal expansion and increased market penetration.

Chart InsightsKroger's store count has been declining since 2019, but 2024 marks a reversal with a slight increase. This aligns with the company's strategic focus on digital sales and operational excellence, as highlighted in their earnings call. The completion of 30 major store projects in 2025 suggests a renewed emphasis on physical retail presence. Despite challenges like flat EPS and lower fuel profitability, Kroger's investments in digital growth and alternative profit businesses indicate a balanced approach to expansion and profitability.

Data provided by:

Main Street Data

Kroger Company Earnings Call Summary

Earnings Call Date:Aug 16, 2025

(Q2-2025)

% Change Since: |

Next Earnings Date:Nov 27, 2025

Earnings Call Sentiment Positive

The earnings call reflects a strong overall performance with significant growth in e-commerce and identical sales, strategic pricing investments, and operational improvements. However, challenges such as declining fuel sales, store closures, and increased LIFO charges provide some concerns.

Q2-2025 Updates

Positive Updates

E-Commerce Growth

E-commerce sales grew by 16% in the second quarter, led by delivery performance. This marks an important growth area for the company with improvements in both pickup and delivery profitability.

Identical Sales Increase

Identical sales without fuel grew 3.4%, marking the sixth consecutive quarter of such growth. The key drivers were pharmacy, e-commerce, and fresh categories.

Strategic Price Investments

Lowered prices on more than 3,500 products, improving price spreads against major competitors and maintaining stable gross margins.

Adjusted EPS Growth

Adjusted EPS grew by 12% compared to last year, marking the strongest growth rate since 2023.

Operational Improvements

OG&A rate improved by 41 basis points on an underlying basis, driven by productivity improvements and cost optimization.

Strength in Pharmacy and Retail Media

Strong growth in pharmacy scripts and retail media, with the latter seeing a slight acceleration in business performance.

Negative Updates

Fuel Sales Decline

Fuel sales were lower compared to last year due to a decrease in the average retail price per gallon and fewer gallons sold.

Store Closures and Workforce Reduction

The company is closing approximately 60 unprofitable stores and reduced its corporate administrative team by nearly a thousand associates.

LIFO Charge Increase

The LIFO charge increased due to higher-than-expected inflation, impacting profitability.

Company Guidance

During The Kroger Co.'s second quarter 2025 earnings call, several key metrics were highlighted that reflect the company's strategic progress and financial performance. Identical sales without fuel grew by 3.4%, marking the sixth consecutive quarter of improvement, with notable growth in pharmacy, e-commerce, and fresh categories. E-commerce sales surged by 16%, driven by delivery performance. Adjusted FIFO operating profit stood at $1.1 billion, while adjusted EPS increased by 12% to $1.04. The company's FIFO gross margin rate, excluding certain items, improved by 39 basis points, though decreased by nine basis points when excluding the sale of Kroger Specialty Pharmacy. Operating general and administrative expenses, excluding fuel and adjustment items, improved by five basis points. Looking ahead, Kroger raised its full-year identical sales without fuel guidance to a range of 2.7% to 3.4% and adjusted its net operating profit and EPS guidance. The company also plans to execute 30 major store projects in 2025 and expects a 30% increase in store openings for 2026.

Kroger Company Financial Statement Overview

Summary

Kroger's financial statements depict a stable yet leveraged company with moderate profitability. The income statement shows steady operational efficiency, but the high debt-to-equity ratio and low equity ratio on the balance sheet highlight financial risks. Strong cash generation is evident, but declining free cash flow growth could impact future liquidity.

Income Statement

Positive

Kroger's income statement reveals a stable gross profit margin of approximately 23%, with a TTM net profit margin of 1.76%. The revenue growth has been modest, slightly declining over the past year. However, EBIT and EBITDA margins are relatively steady, indicating decent operational efficiency.

Balance Sheet

Positive

The balance sheet shows a high debt-to-equity ratio of 2.83, indicating significant leverage. Return on equity has been improving, currently at 29% TTM, suggesting effective use of equity. The equity ratio is low at 16.7%, highlighting potential financial risk due to high liabilities.

Cash Flow

Positive

Kroger's cash flow statement displays a healthy operating cash flow to net income ratio of 2.12 TTM, indicating strong cash generation relative to its earnings. However, the free cash flow growth has declined, and the free cash flow to net income ratio is relatively low, which could impact future liquidity.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	146.97B	147.12B	150.04B	148.26B	137.89B	132.50B
Gross Profit	30.51B	30.16B	30.24B	28.81B	27.52B	28.15B
EBITDA	7.77B	7.65B	7.04B	7.03B	6.06B	7.29B
Net Income	2.58B	2.67B	2.16B	2.24B	1.66B	2.58B
Balance Sheet
Total Assets	53.25B	52.62B	50.51B	49.54B	49.09B	48.64B
Cash, Cash Equivalents and Short-Term Investments	5.92B	5.27B	3.10B	2.14B	2.90B	2.78B
Total Debt	25.21B	25.08B	19.25B	20.41B	20.44B	20.59B
Total Liabilities	44.34B	44.34B	38.90B	39.52B	39.66B	39.09B
Stockholders Equity	8.91B	8.29B	11.62B	10.04B	9.45B	9.58B
Cash Flow
Free Cash Flow	1.84B	1.78B	2.88B	1.23B	3.58B	3.95B
Operating Cash Flow	5.60B	5.79B	6.79B	4.31B	6.19B	6.82B
Investing Cash Flow	-3.25B	-3.23B	-3.75B	-3.02B	-2.61B	-2.81B
Financing Cash Flow	-473.00M	-490.00M	-2.17B	-2.29B	-3.44B	-2.71B

Kroger Company Technical Analysis

Technical Analysis Sentiment

Negative

Last Price67.03

Price Trends

50DMA

70.32

Negative

100DMA

69.59

Negative

200DMA

65.99

Positive

Market Momentum

MACD

-0.90

Positive

RSI

37.38

Neutral

STOCH

31.63

Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For KR, the sentiment is Negative. The current price of 67.03 is below the 20-day moving average (MA) of 68.97, below the 50-day MA of 70.32, and above the 200-day MA of 65.99, indicating a neutral trend. The MACD of -0.90 indicates Positive momentum. The RSI at 37.38 is Neutral, neither overbought nor oversold. The STOCH value of 31.63 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for KR.

Kroger Company Risk Analysis

Kroger Company disclosed 15 risk factors in its most recent earnings report. Kroger Company reported the most risks in the "Production" category.

Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy

Latest Risks Added 0 New Risks

Kroger Company Peers Comparison

Overall Rating

UnderperformOutperform

Sector (62)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
KR	68 Neutral	$44.32B	18.22	24.06%	1.95%	-2.11%	25.03%
SFM	67 Neutral	$13.11B	27.63	36.94%	―	16.83%	52.71%
GO	66 Neutral	$1.72B	221.44	0.68%	―	8.47%	-85.17%
WMK	64 Neutral	$1.76B	17.68	7.86%	1.95%	2.49%	15.99%
Sector *	62 Neutral	$20.32B	14.51	-3.18%	3.18%	1.92%	-6.57%
ACI	61 Neutral	$10.39B	11.31	31.10%	3.07%	1.96%	-14.99%
IMKTA	52 Neutral	$1.26B	22.89	3.58%	0.97%	-7.96%	-64.67%

* Consumer Defensive Sector Average

Performance Comparison

Kroger Company

67.03

12.94

23.92%

IMKTA

Ingles Markets

67.95

-3.19

-4.48%

WMK

Weis Markets

69.88

3.47

5.23%

SFM

Sprouts Farmers

134.10

32.37

31.82%

Grocery Outlet Holding

17.56

1.29

7.93%

ACI

Albertsons Companies

18.55

0.08

0.43%

Glossary

BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.Date of analysis: Sep 11, 2025