Should Value Investors Buy The Kroger Co. (KR) Stock?

Here at Zacks, our focus is on the proven Zacks Rank system, which emphasizes earnings estimates and estimate revisions to find great stocks. Nevertheless, we are always paying attention to the latest value, growth, and momentum trends to underscore strong picks.

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 fundamental analysis and traditional valuation metrics to find stocks that they believe are being undervalued by the market at large.

Zacks has developed the innovative Style Scores system to highlight stocks with specific traits. For example, value investors will be interested in stocks with great grades in the "Value" category. When paired with a high Zacks Rank, "A" grades in the Value category are among the strongest value stocks on the market today.

One stock to keep an eye on is The Kroger Co. (KR). KR is currently sporting a Zacks Rank of #2 (Buy), as well as an A grade for Value. The stock holds a P/E ratio of 12.39, while its industry has an average P/E of 23.04. Over the past 52 weeks, KR's Forward P/E has been as high as 12.92 and as low as 9.49, with a median of 10.46.

KR is also sporting a PEG ratio of 2.56. This figure is similar to the commonly-used P/E ratio, with the PEG ratio also factoring in a company's expected earnings growth rate. KR's PEG compares to its industry's average PEG of 3.62. Within the past year, KR's PEG has been as high as 2.89 and as low as 1.65, with a median of 2.10.

Another notable valuation metric for KR is its P/B ratio of 3.44. The P/B is a method of comparing a stock's market value to its book value, which is defined as total assets minus total liabilities. This company's current P/B looks solid when compared to its industry's average P/B of 5.43. Over the past year, KR's P/B has been as high as 3.59 and as low as 2.73, with a median of 3.06.

Finally, our model also underscores that KR has a P/CF ratio of 6.79. This data point considers a firm's operating cash flow and is frequently used to find companies that are undervalued when considering their solid cash outlook. KR's P/CF compares to its industry's average P/CF of 17.15. KR's P/CF has been as high as 7.09 and as low as 5.09, with a median of 5.77, all within the past year.

These are just a handful of the figures considered in The Kroger Co.'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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