Kroger Co (NYSE: KR)

Sector: Consumer Defensive Industry: Grocery Stores CIK: 0000056873
Market Cap 50.34 Bn
P/B 4.49
P/E 26.79
P/S 0.34
ROIC (Qtr) 3.43
Div Yield % 2.08
Rev 1y % (Qtr) 0.67
Total Debt (Qtr) 25.20 Bn
Debt/Equity (Qtr) 3.58
Add ratio to table...

About

The Kroger Co., commonly referred to as Kroger, is a retail giant that operates a chain of supermarkets, multi-department stores, and fuel centers across the United States. With a history that spans over a century, Kroger has grown to become one of the largest retailers in the United States, with a diverse customer base and a strong brand recognition. The company operates under various banners, including Kroger, Harris Teeter, Ralphs, and Smith's, among others. Kroger's main business activities involve the sale of consumer products through its...

Read more

Investment thesis

Bull case

  • Operating cash flow of 6.06B provides exceptional 757.75x coverage of minority interest expenses 8M, showing strong core operations.
  • Operating cash flow of 6.06B provides strong 37.42x coverage of stock compensation 162M, indicating sustainable incentive practices.
  • Retained earnings of 28.20B provide full 1.25x coverage of long-term debt 22.60B, indicating strong internal capital position.
  • Tangible assets of 47.91B provide robust 9.44x coverage of other current liabilities 5.07B, indicating strong asset backing.
  • Operating cash flow of 6.06B fully covers other non-current liabilities 3.58B by 1.69x, showing strong long-term stability.

Bear case

  • Operating cash flow of 6.06B barely covers its investment activities of (3.84B), with a coverage ratio of -1.58, indicating heavy reliance on external financing for growth which may not be sustainable in a tighter credit environment.
  • Operating cash flow of 6.06B provides thin coverage of dividend payments of (891M) with a -6.80 ratio, suggesting potential dividend sustainability issues if operational performance deteriorates.
  • Operating earnings of 1.46B show weak coverage of depreciation charges of 3.96B, with a 0.37 ratio indicating high capital intensity and potential reinvestment needs.
  • High financing cash flow of (11.62B) relative to working capital of (2.23B), which is 5.22x suggests concerning dependence on external funding for operational needs.
  • Free cash flow of 2.39B represents just -0.49x of debt issuance (4.88B), suggesting concerning reliance on leverage rather than internal cash generation for growth.

Peer comparison

Companies in the Grocery Stores
S.No. Ticker Company Market Cap P/E P/S Total Debt (Qtr)
1 KR Kroger Co 50.34 Bn 26.79 0.34 25.20 Bn
2 ACI Albertsons Companies, Inc. 10.14 Bn 14.10 0.15 15.43 Bn
3 SFM Sprouts Farmers Market, Inc. 6.63 Bn 12.92 0.77 1.86 Bn
4 WMK Weis Markets Inc 1.95 Bn 30.13 0.67 0.18 Bn
5 IMKTA Ingles Markets Inc 1.60 Bn 9.10 0.27 0.54 Bn
6 GO Grocery Outlet Holding Corp. 1.11 Bn -251.00 0.24 1.81 Bn
7 DDL Dingdong (Cayman) Ltd 0.61 Bn 15.44 0.18 0.35 Bn
8 NGVC Natural Grocers by Vitamin Cottage, Inc. 0.61 Bn 12.68 0.45 0.32 Bn

Industry comparisons

Current Valuation Value Ind Avg Percentile
EV to Assets EV to Assets 1.32 0.85
EV to Cash from Ops. EV/CFO 11.24 10.95
EV to Debt EV to Debt 2.69 2.65
EV to EBIT EV/EBIT 22.77 17.17
EV to EBITDA EV/EBITDA 10.51 4.97
EV to Free Cash Flow [EV/FCF] EV/FCF 28.17 -2.66
EV to Market Cap EV to Market Cap 1.35 2.07
EV to Revenue EV/Rev 0.46 0.52
Price to Book Value [P/B] P/B 4.49 1.46
Price to Earnings [P/E] P/E 26.79 -10.31
Dividend Metrics Value Ind Avg Percentile
Dividend Coverage Ratio Div Coverage (Qtr) 0.89 -0.52
Dividend Payout Ratio % Div Payout % (Qtr) 119.10 20.93
Dividend per Basic Share Div per Share (Qtr) 1.34 0.46
FCF Dividend Payout Ratio % FCF Div Payout % (Qtr) 36.72 130.08
Interest Coverage Int. cover (Qtr) 2.26 -12.18
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex 1y % (Qtr) 3.70 0.38
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) -70.38 36.75
Dividend Growth (1y) % Div 1y % (Qtr) 9.84 3.04
EBIAT Growth (1y) % EBIAT 1y % (Qtr) -53.98 -54.96
EBITDA Growth (1y) % EBITDA 1y % (Qtr) -30.73 -64.08
EBIT Growth (1y) % EBIT 1y % (Qtr) -62.85 -86.63
EBT Growth (1y) % EBT 1y % (Qtr) -76.98 -219.58
EPS Growth (1y) % EPS 1y % (Qtr) -71.13 -171.99
FCF Growth (1y) % FCF 1y % (Qtr) -4.29 3.92
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr) 0.87 2.50
Liquidity Ratios Value Ind Avg Percentile
Asset Utilization Ratio Asset Util Ratio (Qtr) 2.86 1.74
Cash Payout Ratio Cash Payout (Qtr) 0.09 0.05
Cash Ratio Cash Ratio (Qtr) 0.22 0.30
Current Ratio Curr Ratio (Qtr) 0.88 1.21
Debt to Equity Ratio Debt/Equity (Qtr) 3.58 1.90
Interest Cover Ratio Int Coverage (Qtr) 2.26 -12.18
Times Interest Earned Times Interest Earned (Qtr) 2.26 -12.18
Profitability Value Ind Avg Percentile
EBITDA Margin % EBITDA Margin % (Qtr) 3.70 1.72
EBIT Margin % EBIT Margin % (Qtr) 0.99 -0.05
EBT Margin % EBT Margin % (Qtr) 0.55 -1.40
Gross Margin % Gross Margin % (Qtr) 23.20 24.88
Net Profit Margin % Net Margin % (Qtr) 0.50 -1.65