Kroger Co (KR) stock analysis

P/E above its 5-year median

Kroger's P/E of 37.8 is above its own 5-year median of 18.5.

P/E above the industry

Kroger's P/E of 37.8 is above the Consumer staples median of 23.3.

EV/EBITDA above its 5-year median

Kroger's EV/EBITDA of 10.3 is above its 5-year median of 7.6.

P/B above the industry

Kroger's price-to-book of 7.03 is above the Consumer staples median of 2.93.

Trading above fair value

The share price of $69.49 is above our fair value estimate of $44.45.

Margin of safety under 20%

The price is 56.3% above fair value, so there is no margin of safety.

Revenue growing under 10% a year

Revenue grew -0.1% a year over the last three fiscal years, short of the 10% we look for.

EPS growing under 10% a year

Diluted EPS grew -20.5% a year over the last three fiscal years.

Earnings growth not accelerating

Net income grew -60.2% over the last twelve months, against a 5-year average of -17.0% a year.

Growing slower than the industry

Revenue grew 1.6% over the last twelve months; the Consumer staples median is 3.8%.

Guidance lowered

Kroger lowered its FY26 Identical Sales without fuel outlook on Sep 11, 2026.

Gross margin slipping

Gross margin was 23.1% over the last twelve months, against 23.1% a year earlier.

Return on equity under 15%

Return on equity was 14.3% over the last twelve months and averaged 20.3% over five years; we look for 15% on both.

Return on capital under 10%

Return on invested capital was 8.5%, below the 10% that usually covers the cost of capital.

Return on equity above the industry

Kroger's return on equity of 14.3% is above the Consumer staples median of 6.3%.

Earnings shrank over 5 years

Net income shrank 17.0% a year on average over the last five fiscal years.

Net margin below its 5-year average

Net margin was 0.7% over the last twelve months, against a 5-year average of 1.3%.

Net margin below the industry

Kroger's net margin of 0.7% is below the Consumer staples median of 0.7%.

High debt

Debt is 263% of shareholders' equity, above the 40% we consider low.

Debt rising against equity

Debt to equity rose from 130% five years ago to 263%.

Debt covered by cash flow

Operating cash flow over the last twelve months equals 43.7% of total debt.

Interest coverage

Interest expense is not reported separately.

Short-term assets don't cover short-term debts

Current assets are 0.70 times current liabilities.

Low bankruptcy risk

The Altman Z-score is 4.43; above 3 is the safe zone and below 1.8 the distress zone.

Pays a dividend

Kroger paid dividends worth 2.1% of the share price over the last twelve months.

Yield below Treasuries

The 2.1% yield is below the 4.4% on a 1-year Treasury.

Yield below the top quarter

The top quarter of US dividend payers yield 3.8% or more; Kroger yields 2.1%.

Dividend not cut

The dividend per share has not fallen by more than 10% in any of the last 10 fiscal years.

Covered by earnings

Dividends take 82.4% of net income.

Covered by free cash flow

Dividends take 37.5% of free cash flow.