KR Fundamental Research Investment Analysis, The Kroger Company

The Kroger Company (KR)

The Razor's Edge

2-Year Price History

Recent Price
(4/28 6:40PM) +1.0%
$21.68
52-Week Price
$19.39 - $30.99
Market Capitalization
$14.0 Billion
Dividend Yield
1.70%
Most Recent Dividend
$0.35

About The Kroger Company

The Kroger Company is considered to operate in the Services sector. They specifically operate in the Grocery Stores business segment contained within the Retail industry.

The Company manufactures and processes some of the food for sale in its supermarkets. It operates retail food and drug stores, multi-department stores, jewelry stores, and convenience stores throughout the United States.

Ockham's Rating

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KR Revenue

As we have often noted, in our valuation methodology, "Cash is King." Well, it goes without saying that if a company cannot produce sales then there is no ability to generate cash flow. By that logic we look very closely at revenue numbers as our second most important factor in valuing a company's stock. We have established reasonable Price to Sales per share ranges based on historical data of the last 10 years. For, KR the high and low end of the Price to Sales per share ratios are 0.31x and 0.22x respectively.

Notice that KR's current Price to Sales per share ratio is 0.18x, which is quite a bit below what we consider a normal Price to Sales ratio for this stock. Given normal conditions and a price of $21.42, KR is 33% below where we would expect to see it. This will beneficially factor into our final analysis of KR as it is not often that this stock sinks to these levels.

KR Cash Earnings

Looking at KR specifically in their Cash Earnings capabilities, Ockham views KR as significantly below their historical average multiples of Cash Earnings, as calculated by our proprietary analysis. It is incredibly important to understand that for KR, the current level of Cash Earnings compared to its historical levels helps identify where KR is in relation to what the investing community was willing to pay for this level of Cash Earnings in the past. With a historical high Cash Earnings per share ratio of 9.32 and a historical low Cash Earnings per share ratio of 6.44, an investor can relate where value becomes optimal.

So what does "significantly below" mean when we talk about Price to Cash Earnings numbers for KR? From the Ockham perspective, we are looking specifically at KR to see if the market is recognizing the huge disparity between KR's past stock price to Cash Earnings ratio to today's levels. At a difference of 35% below the average historical Price to Cash Earnings ratio, our view would be quite positive at this point. However, as with all metrics, we need to also take other factors into account when looking at KR. While we view better Cash Earnings metrics as very important, if the market is slow to identify this value, or if Cash Earnings were to fall from these levels, we would become more neutral in our stance.

KR Dividends

A positive Ockham rating does not require a company to pay out an inviting dividend or a dividend at all. However, we believe dividends provide a useful measure of a company's inherent expectations.

Comparable to our analysis of Sales and Cash Earnings per share, we examine dividend yields from KR against the historic high and low levels over an available data range. Because KR has an established history of paying a dividend to shareholders, there is value in comparing recent dividends to historical dividends. In KR’s case, the estimated annual dividend is $0.36 producing a current dividend yield of 1.68%. The highest dividend yield from KR in recent history was 1.86% while the lowest dividend yield was 0.00%. It's hard not to notice that KR pays a current dividend yield that is 80.65% above the historical median. This peaks our interest since our analysis is looks favorably upon dividend yields that are greater than the historical median.

Peer Comparison

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The Kroger Company Industry Grouping

(4/27/2009)
Company Ticker Market Cap (Ml) Latest
Price
Price/Cash Earnings Price/Sales 5-Yr. Rev.
Growth Rate
5-Yr.
Avg. ROE.
Current 10-Yr. Range* Current 10-Yr. Range*
Peer Company Averages (not incuding KR) 8.93 4.99 » 29.04 0.80 0.38 » 2.22 6.57% 60.35%
*10 year range does not include current year values
Best Buy Company, Inc. BBY $15.8 Billion $38.27 8.57 3.59 » 32.92 0.33 0.15 » 1.21 13.83% 23.60%
The Kroger Company KR $14.0 Billion $21.46 5.19 3.58 » 13.13 0.18 0.16 » 0.47 7.16% 18.49%
Kohl's Corp. KSS $13.7 Billion $44.86 9.69 5.19 » 47.47 0.77 0.45 » 3.90 9.77% 15.90%
The TJX Companies, Inc. TJX $11.1 Billion $27.00 8.71 5.49 » 15.99 0.57 0.39 » 1.05 7.35% 37.28%
The Gap, Inc. GPS $10.4 Billion $14.89 6.91 4.24 » 31.28 0.72 0.45 » 3.36 -1.73% 20.06%
AutoZone, Inc. AZO $9.0 Billion $164.16 10.74 6.46 » 17.55 1.61 0.48 » 1.57 3.63% 204.92%
>
Ockham Ratings & Analysis Report
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The latest TV Media Discussion

7:49:33 AM KR $20.62 The Kroger Company
12 days ago (04/16)
“…Huge risks in the hopes of a big payoff only to lose more than a third of the money. For more on this i'm joined by oregon's attorney general. Good morning, mr. KROGER, thanks for being here >> it is great to be here. How are you this morning? Alexis: i'm terrific. Bring us up-to-date what is it that oppenheimer did with your …”
1:49:13 PM KR $21.68 The Kroger Company
18 days ago (04/10)
“…Frontera. We've seen some excellent double digit sales growth year over year for those product lines. Dominick's or jewel or safeway or KROGER and see rick bayless's instantly make a recognition. That's the guy that really cares about his food product. Really puts a lot of passion and energy into that jar. Not just a pitch man but who is …”
6:12:06 PM KR $21.68 The Kroger Company
Mad Money
26 days ago (04/02)
“…>> I created a false dichotomy yesterday because whole foods is actually a discretionary play not unlike whirlpool or best buy and KROGER was an that's why it was a complicated con vo losing dismragz of ideas. I keep using the term whirlpool. …”
6:11:21 PM KR $21.68 The Kroger Company
Mad Money
26 days ago (04/02)
“…Mike? >> a spring boo-yah to you. >> hey, research in motion >> enjoyed yesterday's segment when you compared KROGER versus >> did you like that? >> I liked that one. >> we spent a lot of time on that one. I spoke to someone who said how do you come up with these ideas? …”
6:27:11 PM KR $21.45 The Kroger Company
Mad Money
27 days ago (04/01)
“…Like polypropylene. Basically I think it's very, very cheap. Cleanup on aisle 4. It's curious case of KROGER versus whole foods. Use the clues from this supermarket sweep to see the and stay with cramer! >>> coming up, how do your …”
6:25:56 PM KR $21.45 The Kroger Company
Mad Money
27 days ago (04/01)
“…I think that you're being a pig if you caught this huge -- 85% move here. Come on. Business is not that much that's the whole point. Higher in part because the world view of most investors changed. Simply, KROGER didn't go down because KROGER. It went down because investors were selling the recession-resistant stocks. I think too hard. The bottom line, this is how we this is what we money managers …”
6:25:28 PM KR $21.45 The Kroger Company
Mad Money
27 days ago (04/01)
“…Danny myers, hospitality scale. I think it's saying that we're coming out a depression. I don't think that mooch is at all about the micro. It has to be about the mack propose things are getting buy whole foods or KROGER, no, no, that's not the whole point of this whole essay. Figuring out what the market's attitude will be over the second I believe that while whole foods …”
6:25:00 PM KR $21.45 The Kroger Company
Mad Money
27 days ago (04/01)
“…Pal buddy nixon. But I did know that it did well enough to justify the kind of rally that the stock had. Maybe it should have never been that low in the first place. So what did we learn from this process? KROGER tells us that it went down because we're going into a recession camp is losing ground. Not enough adherence of the bad recession theory anymore. Company didn't do anything people selling it because they …”
6:24:08 PM KR $21.45 The Kroger Company
Mad Money
27 days ago (04/01)
“…But now I let others perform that exercise. So let's go through the process. See what these two stocks are first look the at micro picture. KROGER's taking share. Dollar of sales becomes a profit and its kept its pricing low to compete with walmart. This is a company that's tugging along with decent consistent growth and getting pretty much everything right. KROGER's a good operator but it still went down. That gives credence to the macro case that people are selling this one because tay think that we're coming out of a whole foods, harder to tell. This is a company that's been in decline for years. Its same-store sales growth has been decelerating since 2004. Sales per square foot declined in 202007, 20s 08. The opposite of KROGER. Since 2006 whole foods has been the classic example. That lost its mojo. Down 77%. 2008 alone. And then the stock really turned …”
6:22:05 PM KR $21.45 The Kroger Company
Mad Money
27 days ago (04/01)
“…These are the questions that you need to know whether the moves in these stocks are known as microdata, meaning in. About each country. Did whole foods go higher because it started to execute well? Did KROGER decline because it wasn't doing well itself? Or these moves are what is known as macro issues? Meaning big-picture economic factors. Can these two stocks tell us something about how the broader economy is doing? …”
6:21:29 PM KR $21.45 The Kroger Company
Mad Money
27 days ago (04/01)
“…Defensive company like procter & or in the puzzle we're trying to solve today, they'd rather own a company with some sizzle, like whole foods, than something slow and steady like KROGER. I want to help teach you how to think like I did at high hedge not so that you can know whether you should buy KROGER or whole foods but so you can look at stocks the way a sophisticated so you use the same methods I used to make so much money at my we're trying to figure out what the known as the world view, the world view, for the next could it be that the defensives, like KROGER and proctor, have and the more aggressive, more cyclical plays, like whole foods or freeport, have gotten too or perhaps the huge rally in huge foods in the decline in KROGER was the market saying, look, things are getting better, not worse. Is whole foods, like best buy, where you buy the stereo the one that people are willing to pay up for? With KROGER, as a kind of a more expensive family dollar store. I mean think about it. Here we go. Look at this. Here's 360 -- this is whole foods organic broth. This is the organic broth you at KROGER, they don't seem that different. I mean a lot of these things seem exactly the same. Tomato …”
6:19:57 PM KR $21.45 The Kroger Company
Mad Money
27 days ago (04/01)
“…Fund where I managed $500 why would I do it? Because what's at stake here is whether or not the defensive stocks, companies like a supermarket like KROGER that are supposed to deliver consistent earns to a recession because we always have to eat are going to do better in the new quarter. They surely did better last of own a company like …”
5:41:43 PM KR $20.80 The Kroger Company
Happy Hour
3/19/2009 5:41 PM
“…Anything you can get your hand on. No reason to pay up for a brand right now. Look at companies, buy generic stocks. Costco, wal-mart. KROGER. Teva pharmaceutical. Cody: as we kept talking about for weeks or months margins should expand over time for those places if costs are dropping they're …”
6:23:42 PM KR $21.44 The Kroger Company
Mad Money
3/11/2009 6:23 PM
“…We had four -- we have four categories in which we are -- the primary are the sole supplier there and happen to enjoy low double-digit growth with KROGER stores last year. >> are there -- this halz been something from the day you I always followed you because of your preechs successors. You say that you will build, buy. …”
9:52:30 AM KR $20.94 The Kroger Company
3/10/2009 9:52 AM
“…They're worried about the card check legislation that would make it easier for yununions to KROGER came out with fourth quarter results. Even though the forecast looks soft for the whole year at $2 to $2.05, the market seems to be …”
6:31:44 PM KR $22.02 The Kroger Company
Mad Money
2/19/2009 6:31 PM
“…Fact that they called me a citigroup estimates that in total private label food, 40% penetration and much higher than the penetration of walmart and KROGER, I think there's so much coming here and people can't afford the good stuff anymore. You save money and so does treehouse and ralcorp. …”
10:26:22 AM KR $21.77 The Kroger Company
2/19/2009 10:26 AM
“…Buying, no question about it. >> time to be buying probably indices, not making a bet on any >> well, you could. There are strong blue clips. Look at KROGER, newmont mining, general electric. These are stocks that won't go >> tell me again ge is not going >> it's going to be huge. >> general electric, the parent …”
7:44:20 AM KR $21.72 The Kroger Company
2/19/2009 7:44 AM
“…Think you've got a pretty good shot at this stock really making a real good move back up to this area I like the risk-reward. They've bet in the last four KROGER I like on weakness. By the way, last thursday up huge in the aftermarket alexis: charles payne. Charles: for anybody who might have done it last week, we sent an alert to our …”
7:43:51 AM KR $21.72 The Kroger Company
2/19/2009 7:43 AM
“…Due recent insider buys. I like when that happens. They beat the street three quarters. It has a clear shot to $24. Alexis: next up is KROGER? Charles: KROGER supermarkets. Last night whole foods came out with an incredible number. When you consider the type of stuff that they -- alexis: right around the corner from my apartment. Works out nicely. Charles: is to be is in a …”
7:50:02 AM KR $21.40 The Kroger Company
Squawk Box
2/13/2009 7:50 AM
“…>> the costs are not abating with pulling back as quickly as you would like. >> heinz. Times like this people going go to private labels, and they go to the cheaper end of the product spectrum. >> is that good news for KROGER and wal-mart necessarily? I mean, they got pretty fat margins on private label stuff, >> I think it is at the margin. Let's face it, if consumers are pulling back, it's relatively …”
12:14:53 PM KR $21.01 The Kroger Company
2/12/2009 12:14 PM
“…Said he has walmart, vcs, the cereal killer, general mills, KROGER, safeway, and al bore toeberto alberto-culver. It didn't move. Sorry about that. >> it went so well in rehearsal. >> yes, it did. What we got there is goldman …”
4:03:28 PM KR $21.44 The Kroger Company
2/10/2009 4:03 PM
“…That was true initially but later on safer names, consumer names moved down noticeably. New lows in a number of consumer stocks here today. Procter & gamble, for example, coca-cola and KROGER as well. Rough day for the overall markets. >> thanks so much. >>> let's get more on the mike crofton ceo of the philadelphia trust company. …”
11:26:03 AM KR $22.91 The Kroger Company
2/9/2009 11:26 AM
“…Purchase of dominic's fine foods. I think it's about a billion eight. And rolled together companies and put them into a company fred meyer, ended up spinning into KROGER for about a 13 billion and then, you know, with our interest when we started getting onto it in wild oats. He had accumulated a share around 8 to $9 per share level back in 2005. …”
5:36:09 PM KR $22.20 The Kroger Company
Happy Hour
2/4/2009 5:36 PM
“…Little bit? Do you invest in stocks. Cody: give us a name, what do you own right now? What do you like? >> I have to tell you I do like wal-mart a lot. I'm also a KROGER girl. Hard to choose between your children and people you love and not only do businesses with but purchases from. God bless I do. Eric: will you sign my cast? …”
5:35:40 PM KR $22.20 The Kroger Company
Happy Hour
2/4/2009 5:35 PM
“…They worked fine. You don't know what she put in as ingredients. Cody: supposed to be defensive play. Eric: forget kraft. They have bad numbers. Hear is the issue. Safeway, KROGER, two big supermarket stores. We talked about wholesale prices for food going down. Corn, wheat, going down. Grocery aisle, you're still paying high price. KROGER and safeway making a a lot of your stuff do you need organic foods? Whole foods is beaten up. People won't pay extra bucks for organic. Do you need organic? >> even companies like wal-mart have great organic. Eric: that is good point. >> they are doing partnerships with local grewers. Cody: safeway and KROGER also? >> safeway and KROGER also. Eric: wal-mart number number one grocer in the world. >> what is great about the companies they allow information what are people I know what is in pantries. I know what everybody has. …”
12:03:29 PM KR $22.50 The Kroger Company
1/30/2009 12:03 PM
“…Service, all sitting at new lows. International paper as well. Even some of the biggest consumer names, what if I cold you walmart is set to close at a new multiyear low today? Proctor & gamble, new low. KROGER, new low. That's what's getting a little bit of attention here. The cyclicals not that surprising. [email protected] Nasdaq is not helping either. >> not at all. …”
4:08:40 PM KR $24.66 The Kroger Company
1/28/2009 4:08 PM
“…I argue after going through the moody's model, that the majority of the first year is for quick in my district KROGER hospitaly pelo issi laying off 400 positionspresentaves. Because they are not getting revenue from the state. As people are being fired or …”
View All The Kroger Company News

Key Fundamentals

KR - The Kroger Company Fundamentals
Price (4/28 6:40PM) $21.68
Volume (4/28 6:40PM) 6.1 Million
Last Close Price $21.46
10 Day Average Volume 6.6 Million
13 Week Price Range $19.39 - $23.01
52 Week Price Range $19.39 - $30.99
LTM Revenue $76.0 Billion
 
Shares Outstanding (01/2009) 652.3 Million
Market Capitalization $14.0 Billion
Shares Held By Institutions 547.4 Million
Institutional Holders 729
% Shares Held By Institutions 84.40%
Earnings Per Share (EPS) $1.90
P/E Ratio 11.30
Book Value Per Share $7.93
 
Gross Margin 22.90%
Annual Dividend 0.36
Dividend Yield 1.70%
Beta 0.56
Fiscal Year Ends January