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Kroger Company (KR)
NYSE:KR
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Kroger Company
(NYSE:KR)
Rating:67Neutral
Price Target:
$73.00
▲(7.84%Upside)
Positive Factors
Alternative Profit Streams
Long-term margin support is expected from growth in alternative profit streams and improving digital profitability.
Customer Loyalty
Kroger continues to win with loyal households and has grown this base for 12 consecutive quarters.
Financial Performance
Consistent free cash flow generation supports ongoing investment and share repurchases.
Negative Factors
Lawsuits
Kroger is being sued by both ACI and C&S Wholesale, with lawsuits seeking substantial damages.
Leadership Uncertainty
The resignation of CEO Rodney McMullen following a Board investigation introduces uncertainty in leadership.
Market Competition
Walmart is gaining share across most categories, presenting strong competition for Kroger.
Kroger Company (KR) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$45.16B
Dividend Yield1.84%
Average Volume (3M)7.29M
Price to Earnings (P/E)18.5
Beta (1Y)0.01
Revenue Growth-1.94%
EPS Growth23.94%
CountryUS
Employees409,000
SectorConsumer Defensive
Sector Strength74
IndustryGrocery Stores
Share Statistics
EPS (TTM)1.14
Shares Outstanding665,853,100
10 Day Avg. Volume7,015,106
30 Day Avg. Volume7,290,133
Financial Highlights & Ratios
PEG Ratio-5.92
Price to Book (P/B)6.00
Price to Sales (P/S)0.00
P/FCF Ratio26.57
Enterprise Value/Market Cap1.60
Enterprise Value/Revenue0.12
Enterprise Value/Gross Profit2.23
Enterprise Value/Ebitda2.40
Forecast
1Y Price Target
$72.00Price Target Upside6.37% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering14
Kroger Company Business Overview & Revenue Model
Company DescriptionThe Kroger Company (KR) is one of the largest retail companies in the United States, operating a range of supermarket chains and multi-department stores. Founded in 1883 and headquartered in Cincinnati, Ohio, Kroger provides a variety of products and services including groceries, pharmaceuticals, and general merchandise. The company also operates fuel centers, convenience stores, and jewelry stores, serving millions of customers across the country.
How the Company Makes MoneyKroger makes money primarily through the sale of grocery products, which include fresh and prepared foods, as well as household essentials. The company's revenue model is built on a multi-channel retail strategy that includes brick-and-mortar stores, e-commerce, and private label brands. Key revenue streams include the sale of national and private label products, fuel, and pharmacy services. Additionally, Kroger has partnerships with a variety of suppliers and leverages data analytics through its loyalty programs to optimize inventory and marketing strategies. The company's earnings are also supported by its investments in technology and distribution networks to enhance operational efficiency and customer experience.
Kroger Company Key Performance Indicators (KPIs)
Any
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.
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.
Data provided by:
Main Street Data
Main Street DataKroger Company Earnings Call Summary
Earnings Call Date:Mar 06, 2025
(Q4-2024)
| % Change Since: 8.77%|
Next Earnings Date:Jun 12, 2025
Earnings Call Sentiment Positive
The earnings call reflected a positive sentiment with strong digital sales, growth in own brands, and significant activity in share repurchases. However, some challenges were noted, such as flat adjusted EPS and lower fuel profitability. Overall, the highlights significantly outweighed the lowlights.Q4-2024 Updates
Positive Updates
Digital Sales Growth
Digital sales grew by 10% compared to last year, with delivery solutions leading sales growth with an 18% increase.
Strong Performance of Our Brands
The Kroger Co.'s own brand items saw strong growth, with more than 90% of customer households purchasing these items last year. The company released over 900 new our brands products in 2024.
Alternative Profit Businesses
Alternative profit businesses generated $1.35 billion in operating profit, driven by a 17% increase in media.
Improved Customer Metrics
Record levels of retention rates and improved customer experience metrics were achieved, driving sales growth.
Capital Allocation and Share Repurchase
The Kroger Co. announced a new $7.5 billion share repurchase authorization and completed an accelerated share repurchase program for $5 billion.
Negative Updates
Flat Adjusted EPS
Adjusted EPS was $1.14, flat compared to the same period last year, excluding the 53rd week.
Fuel Profitability Decline
Fuel sales and profitability were lower compared to last year due to fewer gallons sold and lower average retail price per gallon.
Inflationary Pressures
Inflation increased throughout the year, with certain commodities like eggs experiencing approximately 70% inflation due to avian flu.
Lower Pharmacy Margins
Pharmacy margins were lower, partially offsetting improvements in other areas.
Company Guidance
During the Kroger Co.'s fourth quarter and full year 2024 earnings call, the company provided financial guidance for 2025, projecting identical sales growth without fuel of 2% to 3% and adjusted FIFO operating profit between $4.7 billion and $4.9 billion. Additionally, Kroger expects adjusted net earnings per diluted share to range from $4.60 to $4.80. The company anticipates a LIFO charge of approximately $130 million, assuming inflation aligns with their expectations of 1.5% to 2%. The guidance reflects Kroger's confidence in its growth strategies, driven by strong digital sales, which saw over $13 billion in 2024, and continued investments in operational excellence, alternative profit businesses, and employee wages, with an average hourly rate over $19. The company's capital allocation strategy includes completing 30 major store projects in 2025 and executing a $7.5 billion share repurchase program.Kroger Company Financial Statement Overview
Summary
Kroger demonstrates solid financial performance with stable revenues and profitability. Improvements in profit margins and strong ROE highlight operational efficiency. However, increased leverage and declining free cash flow indicate some financial risks.Income Statement
Kroger displays robust revenue figures with a slight decline from $150.039B in 2024 to $147.123B in 2025, indicating a revenue growth rate of -1.94%. The gross profit margin improved to 22.7%, reflecting efficient cost management. The net profit margin is stable at 1.81%, aligning with industry norms. However, EBIT and EBITDA margins show an upward trend, suggesting operational efficiency improvements.75
Positive
Balance Sheet
The debt-to-equity ratio increased to 3.03, indicating higher leverage, which could pose risk during economic downturns. The equity ratio stands at 15.74%, implying moderate financial stability. Return on equity is 32.17%, showcasing strong profitability. However, the decrease in stockholders' equity from $11.615B to $8.281B is a concern.70
Positive
Cash Flow
Operating cash flow to net income ratio is strong at 2.17, indicating healthy cash generation relative to net income. Free cash flow decreased significantly by 38.4% from 2024 to 2025, highlighting potential cash management issues. Free cash flow to net income ratio is 0.67, showing adequate conversion of earnings to free cash flow.68
Positive
| Breakdown | ||||
| Mar 2025 | Mar 2024 | Mar 2023 | Mar 2022 | Mar 2021 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 147.12B | 150.04B | 148.26B | 137.89B | 132.50B | Gross Profit |
| 33.40B | 30.24B | 31.78B | 30.35B | 30.90B | EBIT |
| 3.85B | 3.10B | 4.13B | 3.48B | 2.78B | EBITDA |
| 7.65B | 7.04B | 7.03B | 6.06B | 7.29B | Net Income Common Stockholders |
| 2.67B | 2.16B | 2.24B | 1.66B | 2.58B |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 3.96B | 3.10B | 2.06B | 2.90B | 2.78B | Total Assets |
| 52.62B | 50.51B | 49.54B | 49.09B | 48.64B | Total Debt |
| 25.08B | 19.25B | 20.41B | 20.44B | 20.59B | Net Debt |
| 21.12B | 17.36B | 19.58B | 18.62B | 18.90B | Total Liabilities |
| 44.34B | 38.90B | 39.52B | 39.66B | 39.09B | Stockholders Equity |
| 8.29B | 11.62B | 10.01B | 9.43B | 9.55B |
| Cash Flow | Free Cash Flow | |||
| 1.78B | 2.88B | 1.23B | 3.58B | 3.95B | Operating Cash Flow |
| 5.79B | 6.79B | 4.31B | 6.19B | 6.82B | Investing Cash Flow |
| -3.23B | -3.75B | -3.02B | -2.61B | -2.81B | Financing Cash Flow |
| -490.00M | -2.17B | -2.29B | -3.44B | -2.71B |
Kroger Company Technical Analysis
Negative
67.69
Price Trends
68.55
Negative
65.48
Positive
60.82
Positive
Market Momentum
-0.33
Positive
44.08
Neutral
47.66
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 67.69 is below the 20-day moving average (MA) of 69.66, below the 50-day MA of 68.55, and above the 200-day MA of 60.82, indicating a neutral trend. The MACD of -0.33 indicates Positive momentum. The RSI at 44.08 is Neutral, neither overbought nor oversold. The STOCH value of 47.66 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 (65)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
72 Outperform | $16.08B | 38.11 | 35.74% | ― | 15.51% | 53.77% | |
71 Outperform | $12.78B | 13.52 | 31.26% | 2.43% | 1.46% | -26.54% | |
67 Neutral | $45.16B | 18.46 | 26.59% | 1.84% | -1.94% | 23.94% | |
67 Neutral | $2.06B | 19.23 | 7.54% | 1.77% | 1.76% | 6.01% | |
65 Neutral | $1.15B | 18.93 | 4.00% | 1.10% | -7.79% | -64.85% | |
65 Neutral | $8.86B | 14.97 | 4.70% | 203.29% | 3.53% | -2.11% | |
60 Neutral | $1.37B | 83.19 | 1.43% | ― | 10.37% | -73.84% |
* Consumer Defensive Sector Average
Performance Comparison
KR
Kroger Company
67.69
16.89
33.25%
IMKTA
Ingles Markets
62.53
-8.29
-11.71%
WMK
Weis Markets
76.91
13.55
21.39%
SFM
Sprouts Farmers
169.27
90.11
113.83%
ACI
Albertsons Companies
22.15
2.33
11.76%
GO
Grocery Outlet Holding
13.75
-7.67
-35.81%
Kroger Company Corporate Events
Executive/Board Changes
Kroger Appoints Ronald Sargent as Interim CEO
Neutral
Mar 20, 2025
On March 2, 2025, Kroger Company’s Board of Directors appointed Ronald Sargent as interim Chief Executive Officer and Chairman of the Board. In his interim role, Mr. Sargent will receive an annual base salary of $4,350,000 and a grant of 60,515 shares of restricted stock, which will vest one year from the award date.
Executive/Board ChangesFinancial Disclosures
Kroger Announces CEO Resignation Amidst Investigation
Negative
Mar 3, 2025
Kroger has announced the resignation of its CEO, Rodney McMullen, following a Board investigation into his personal conduct, which was found to be inconsistent with the company’s ethics policy. Ronald Sargent has been appointed as the interim CEO and Chairman of the Board, while Mark Sutton will serve as the lead independent director. The company expects its full-year sales and earnings to exceed the high end of its guidance range, indicating strong financial performance despite the leadership transition.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
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.