Is Kroger (KR) Stock Undervalued Right Now?

Here at Zacks, we focus on our proven ranking system, which places an emphasis on earnings estimates and estimate revisions, to find winning stocks. But we also understand that investors develop their own strategies, so we are constantly looking at the latest trends in value, growth, and momentum to find strong companies for our readers.

Looking at the history of these trends, perhaps none is more beloved than value investing. This strategy simply looks to identify companies that are being undervalued by the broader market. Value investors use tried-and-true metrics and fundamental analysis to find companies that they believe are undervalued at their current share price levels.

In addition to the Zacks Rank, investors looking for stocks with specific traits can utilize our Style Scores system. Of course, value investors will be most interested in the system's "Value" category. Stocks with "A" grades for Value and high Zacks Ranks are among the best value stocks available at any given moment.

One stock to keep an eye on is Kroger (KR). KR is currently sporting a Zacks Rank of #1 (Strong Buy) and an A for Value. The stock is trading with P/E ratio of 12.16 right now. For comparison, its industry sports an average P/E of 19.55. Over the past 52 weeks, KR's Forward P/E has been as high as 15.17 and as low as 9.88, with a median of 12.66.

Investors should also note that KR holds a PEG ratio of 1.36. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. KR's PEG compares to its industry's average PEG of 3.14. Over the last 12 months, KR's PEG has been as high as 2.26 and as low as 1.34, with a median of 1.88.

We should also highlight that KR has a P/B ratio of 3.22. The P/B ratio is used to compare a stock's market value with its book value, which is defined as total assets minus total liabilities. This stock's P/B looks attractive against its industry's average P/B of 3.66. Within the past 52 weeks, KR's P/B has been as high as 3.82 and as low as 2.36, with a median of 2.94.

Value investors also love the P/S ratio, which is calculated by simply dividing a stock's price with the company's sales. This is a prefered metric because revenue can't really be manipulated, so sales are often a truer performance indicator. KR has a P/S ratio of 0.22. This compares to its industry's average P/S of 0.3.

Finally, we should also recognize that KR has a P/CF ratio of 6.55. This metric focuses on a firm's operating cash flow and is often used to find stocks that are undervalued based on the strength of their cash outlook. KR's current P/CF looks attractive when compared to its industry's average P/CF of 12.47. Over the past 52 weeks, KR's P/CF has been as high as 7.77 and as low as 3.49, with a median of 4.70.

These are just a handful of the figures considered in Kroger's great Value grade. Still, they help show that the stock is likely being undervalued at the moment. Add this to the strength of its earnings outlook, and we can clearly see that KR is an impressive value stock right now.


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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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