Kroger Company (KR) AI Stock Analysis

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Kroger Company

(NYSE:KR)

Rating:69Neutral

Price Target:

$73.00

▲(11.42%Upside)

Kroger's overall score is driven by solid financial performance and positive sentiment from the recent earnings call, emphasizing digital sales growth and operational efficiencies. However, technical indicators suggest caution. The valuation is slightly high, indicating potential overvaluation.

Positive Factors

Customer Loyalty

KR continues to win with loyal households and has grown loyal households for 12 consecutive quarters.

Financial Performance

KR should deliver a solid Q1 with upside potential, supported by a good balance sheet and increased share repurchases.

Market Position

KR's limited tariff exposure is a relative advantage, positioning it favorably in the market.

Negative Factors

Competitive Pressure

There is concern that KR may be ceding share to value-oriented retailers like WMT and Dollar Stores.

Leadership Uncertainty

KR has no permanent CEO, with the former CEO dismissed for undisclosed reasons, leading to strategic uncertainty.

Legal Challenges

KR is being sued by both ACI and C&S Wholesale, with potential damages amounting to billions.

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

Market Cap

$43.63B

Dividend Yield1.95%

Average Volume (3M)6.84M

Price to Earnings (P/E)17.8

Beta (1Y)0.01

Revenue Growth-1.94%

EPS Growth23.94%

CountryUS

Employees409,000

SectorConsumer Defensive

Sector Strength63

IndustryGrocery Stores

Share Statistics

EPS (TTM)1.49

Shares Outstanding665,853,100

10 Day Avg. Volume6,753,592

30 Day Avg. Volume6,839,742

Financial Highlights & Ratios

PEG Ratio0.35

Price to Book (P/B)3.23

Price to Sales (P/S)0.00

P/FCF Ratio26.23

Enterprise Value/Market Cap0.97

Enterprise Value/Revenue0.07

Enterprise Value/Gross Profit1.30

Enterprise Value/Ebitda1.40

Forecast

1Y Price Target

$72.55

Price Target Upside10.73% Upside

Rating ConsensusModerate Buy

Number of Analyst Covering11

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 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

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:Jun 20, 2025

(Q1-2025)

% Change Since: 5.29%|

Next Earnings Date:Sep 05, 2025

Earnings Call Sentiment Neutral

The Kroger Co.'s first-quarter earnings call presented a balanced view of both achievements and challenges. Significant growth was noted in e-commerce and fresh segments, alongside strategic investments in improving customer experience and labor relations. However, challenges such as store closures, declining fuel sales, and the need to address e-commerce profitability were also highlighted. The macroeconomic environment remains uncertain, influencing customer spending habits.

Q1-2025 Updates

Positive Updates

Solid First-Quarter Results

The Kroger Co. announced strong first-quarter results with identical sales, excluding fuel and adjustment items, increasing by 3.2%. Adjusted net earnings per diluted share increased by 4% to $1.49.

Growth in E-commerce

E-commerce sales grew by 15% in the first quarter, driven by strong demand and delivery. This represents a significant impact on results, with improvements in order accuracy and reduced pickup wait times.

Strong Performance in Fresh and Pharmacy Segments

Fresh identical sales outperformed center store sales, supporting overall sales growth. Pharmacy sales were also strong, contributing significantly to identical sales growth.

Strategic Investments in Customer Experience

Investments in projects that grow the core business, accelerate new store openings, and reduce costs are expected to reinvest savings into lower prices and additional store hours.

Our Brands Outperforming National Brands

Our Brands grew faster than national brands for the seventh consecutive quarter, with Simple Truth and Private Selection leading sales growth. New product introductions, like 80 new protein products, were highlighted.

Labor Relations Progress

Significant progress on labor agreements was noted, with new agreements covering more than 23,000 associates ratified.

Negative Updates

Store Closures

Plans to close approximately 60 underperforming stores over the next 18 months were announced, acknowledging not all stores are delivering sustainable results.

Fuel Sales Decline

Fuel results were behind expectations, with sales lower compared to last year due to lower average retail price per gallon and fewer gallons sold.

E-commerce Profitability Challenges

While e-commerce is growing, it is not yet profitable. The company acknowledged the need to become profitable in this segment.

Uncertain Macroeconomic Environment

Customers continue to spend cautiously in an uncertain economic environment, affecting overall consumer confidence and spending patterns.

Company Guidance

During The Kroger Co.'s first quarter 2025 earnings call, the company reported a 3.2% increase in identical sales excluding fuel and adjustment items, and a 4% rise in adjusted net earnings per diluted share to $1.49. Key growth areas included pharmacy, e-commerce, and fresh categories, with e-commerce sales experiencing a 15% increase. The company also announced plans to close approximately 60 underperforming stores over the next 18 months while completing 30 major store projects in 2025. The Kroger Co. is focusing on cost optimization and reviewing its capital allocation strategy to ensure investments yield high returns. They are also committed to growing market share and boosting e-commerce profitability. Despite some challenges, such as lower fuel profitability, the company raised its identical sales guidance to a range of 2.25% to 3.25% for the year. The call highlighted efforts to improve customer experience and associate engagement, with the average hourly wage for associates now over $19.50, increasing to more than $25 when benefits are included.

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

Positive

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.

Balance Sheet

Positive

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.

Cash Flow

Positive

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.

Mar 2025	Mar 2024	Mar 2023	Mar 2022	Mar 2021
Breakdown
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
7.04B	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
5.27B	3.10B	2.14B	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

Technical Analysis Sentiment

Negative

Last Price65.52

Price Trends

50DMA

68.54

Negative

100DMA

66.58

Negative

200DMA

61.89

Positive

Market Momentum

MACD

-0.89

Positive

RSI

40.44

Neutral

STOCH

66.47

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 65.52 is below the 20-day moving average (MA) of 66.69, below the 50-day MA of 68.54, and above the 200-day MA of 61.89, indicating a neutral trend. The MACD of -0.89 indicates Positive momentum. The RSI at 40.44 is Neutral, neither overbought nor oversold. The STOCH value of 66.47 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
SFM	70 Outperform	$15.84B	36.44	35.74%	―	15.51%	53.77%
KR	69 Neutral	$43.63B	17.84	26.59%	1.95%	-1.94%	23.94%
ACI	67 Neutral	$12.14B	12.84	31.26%	2.84%	1.46%	-26.54%
Sector *	65 Neutral	$8.76B	15.22	4.69%	4.58%	3.64%	-2.90%
WMK	64 Neutral	$1.97B	18.36	7.54%	1.86%	1.76%	6.01%
IMKTA	61 Neutral	$1.14B	18.76	4.00%	1.08%	-7.79%	-64.85%
GO	60 Neutral	$1.28B	77.49	1.43%	―	10.37%	-73.84%

* Consumer Defensive Sector Average

Performance Comparison

Kroger Company

65.52

16.37

33.31%

IMKTA

Ingles Markets

61.15

-7.59

-11.04%

WMK

Weis Markets

73.20

11.14

17.95%

SFM

Sprouts Farmers

161.86

84.51

109.26%

Grocery Outlet Holding

13.05

-8.17

-38.50%

ACI

Albertsons Companies

21.09

2.05

10.77%

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.

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.