One-glance verdict
Undervalued
$90.10 our estimate vs market $59.48
Wall Street consensus: $68.14 (-24.4% lower than our fair-value estimate)
34% below our estimate, below the bear case
Fundamentals snapshot
The Kroger Co.
KR · NYQ · Consumer Defensive · Grocery Stores
Current price
$59.48
52-week range
$54.15 - $76.58
Market cap
$35.13B
Balance sheet
Distressed
2.96x Stretched
Net debt $22.48B. Interest coverage shows how many times profit covers the interest bill.
What stands out
3 Rewards
2 Risks
3 rewards · 2 risks
- Reward Revenue grew 1.1% last year.
- Reward Returns 14.4% on equity, ahead of 16% of its peers.
- Risk Stock trades 44.2% above its 5-year average P/E.
- Risk Net debt grew 10.1% over 3 years.
What this company does
The Kroger Co.
Kroger is one of the largest grocery store operators in the United States, running familiar chains like Ralphs, Fred Meyer, and Harris Teeter. The company's main business is selling a massive volume of everyday necessities like food, medicine, and household goods, which people need to buy consistently. By also manufacturing many of its own store-brand products and selling fuel, Kroger can better control its costs and protect its profit margins (the slice of every sales dollar it gets to keep as profit).
How the company got here
Kroger's story starts in 1883 when Barney Kroger used his life savings to open a single grocery store in Cincinnati, Ohio, with a simple motto: never sell anything you wouldn't want yourself. He was an innovator from the beginning, becoming the first grocer to have his own bakery and to sell meat and groceries under the same roof. Over the decades, Kroger grew by merging with other regional grocery chains, like Dillon Companies in 1983 and a major merger with Fred Meyer, Inc. in 1999, which significantly expanded its reach across the country. This strategy of combining with other stores helped Kroger become one of the largest retailers in the world.
What it actually does
Kroger is a large retailer in the United States that most people know for its supermarkets and multi-department stores. You might shop at a store with a different name, like Ralphs, Dillons, or Harris Teeter, and not realize it's part of the Kroger family of companies. Beyond just selling groceries, many of its stores also have pharmacies, sell general merchandise like clothes and electronics, and even have their own fuel centers where you can buy gas. The company also makes many of its own food products, from bread and milk to ice cream, under its own store brands.
Supermarkets and Other Retail
This is Kroger's main business and the part you are likely most familiar with, representing the vast majority of its sales. It includes all the items you'd find in a typical grocery run, from fresh produce, meat, and dairy to packaged goods like cereal and snacks. This segment also includes non-food items like health and beauty products, general merchandise, and fuel sold at its gas stations. Customers pay for these goods at the checkout, whether in-store or through online ordering for pickup or delivery.
Pharmacy
A significant and growing part of Kroger's business is its in-store pharmacies, which can be found in over 2,200 of its locations. Here, customers can fill prescriptions, get vaccinations, and buy over-the-counter medications and health products. This business makes money by selling prescription drugs, for which it is paid by customers and their health insurance providers. While it's a smaller portion of total sales than the grocery segment, it's an important service that brings customers into the stores regularly.
Manufacturing
A key part of Kroger's strategy is that it produces many of its own private-label products, which you see on the shelves with names like 'Kroger', 'Simple Truth', or 'Private Selection'. The company operates dozens of its own food manufacturing plants that make everything from baked goods and dairy products to beverages. This allows Kroger to have more control over the quality and cost of its products, often offering them to shoppers at a lower price than national brands. This part of the business contributes to the overall profitability (the ability to make a profit) of the items sold in its stores.
What management is betting on now
Kroger's leadership is focused on making the shopping experience seamless, whether customers are in-store or online, and using data to personalize offers for shoppers. They are heavily investing in their digital business, aiming to make online shopping and delivery faster and more profitable. The company is also concentrating on its fresh food offerings and its own 'Our Brands' products to attract and keep loyal customers. A major strategic move is the proposed merger with Albertsons, another large grocery chain, which management believes will allow them to lower prices for customers.
Price history
How the share price has moved
—
Loading price history…
Earnings history
Last 8 quarters — what happened
Click any quarter to read the call summary and what the numbers say.
FY2025 Q4
$-28.00M
FY2026 Q1
$520.00M
FY2026 Q2
$1.10B
FY2026 Q3
$615.00M
FY2026 Q4
$29.00M
FY2027 Q2
$481.00M
FY2027 Q3
$167.00M
Revenue
$34.62B
Net income
$641.00M
Diluted EPS
1.05
Operating cash flow
$1.31B
Free cash flow
$167.00M
Fetching…
Sources
Revenue
$46.12B
Net income
$903.00M
Diluted EPS
1.46
Operating cash flow
$1.77B
Free cash flow
$481.00M
Fetching…
Sources
Revenue
$33.86B
Net income
$-1.32B
Diluted EPS
-2.02
Operating cash flow
$970.00M
Free cash flow
$29.00M
Fetching…
Sources
Revenue
$33.94B
Net income
$609.00M
Diluted EPS
0.91
Operating cash flow
$1.54B
Free cash flow
$615.00M
Fetching…
Sources
Revenue
$45.12B
Net income
$866.00M
Diluted EPS
1.29
Operating cash flow
$2.15B
Free cash flow
$1.10B
Fetching…
Sources
Revenue
$34.31B
Net income
$634.00M
Diluted EPS
0.90
Operating cash flow
$1.40B
Free cash flow
$520.00M
Fetching…
Sources
Revenue
$33.63B
Net income
$618.00M
Diluted EPS
0.84
Operating cash flow
$926.00M
Free cash flow
$-28.00M
Fetching…
Sources
Is it cheap or expensive?
Fair value $90.10 vs current price $59.48
Wall Street consensus is the average analyst price target: $68.14 (-24.4% lower than our fair-value estimate).
Our most-likely fair value is $90.10 a share — about 51.5% above today's price of $59.48, so the stock currently looks cheap (undervalued).
Is it drowning in debt?
Distressed
Net debt $22.5B. Interest coverage 3.0x.
Net debt
$22.48B
Interest coverage
2.96x
The Kroger Co.'s profit covers its interest bill about 3.0 times over.
Distressed
Worse cushion
Baseline
Better cushion
KR
BASELINE
The Kroger Co.
Total debt $24.16B Interest coverage 2.96x This is the baseline the peer rows are being compared against.
Total debt $15.70B Interest coverage 1.46x -51% vs KR Carries about 2.0x less debt cushion than KR.
Total debt $75.09B Interest coverage 10.66x +260% vs KR Carries about 3.6x more debt cushion than KR.
Total debt $8.58B Interest coverage 67.42x +2,180% vs KR Carries about 22.8x more debt cushion than KR.
Total debt $19.20B Interest coverage 11.50x +289% vs KR Carries about 3.9x more debt cushion than KR.
Total debt $21.68B Interest coverage 3.74x +27% vs KR Carries about 1.3x more debt cushion than KR.
What you should know
The case for and against KR
3 Rewards
2 Risks
Rewards
-
Revenue grew 1.1% last year.
-
Returns 14.4% on equity, ahead of 16% of its peers.
-
Free cash flow was positive in 10/10 years.
Risks
-
Stock trades 44.2% above its 5-year average P/E.
-
Net debt grew 10.1% over 3 years.
The numbers
All the key metrics, grouped by purpose
Tap any ? icon to learn what it means.
Valuation
How expensive the stock looks
P/E (TTM)
31.64x
Forward P/E
10.79x
P/B
6.07x
P/S
0.24x
EV/EBITDA
7.16x
PEG ratio
0.60x
Profitability
How much profit each dollar creates
Gross margin
23.9%
Operating margin
3.0%
Net margin
0.7%
ROE
14.4%
ROA
5.8%
Health
Liquidity and balance-sheet strength
Debt / equity
4.13x
Current ratio
0.70x
Quick ratio
0.21x
Total debt
$24.16B
Total cash
$1.68B
Growth
How the business has been compounding
Revenue TTM
$149.33B
Revenue 5Y CAGR
1.7%
EPS TTM
1.88
EPS 5Y CAGR
-20.5%
Cash flow
How much cash the business throws off
Operating CF TTM
$6.71B
Free CF TTM
$3.46B
FCF margin
2.3%
Dividend
Shareholder payout
Yield
2.7%
Payout ratio
75.7%
Last ex-div date
2026-11-16