Kroger
KR
$56.48
-0.44%
The Kroger Co. is the largest pure-play supermarket operator in the United States, operating roughly 2,700 stores across more than 30 banners, with a business primarily grocery-led (about 78% of sales) complemented by fuel centers and pharmacies. As a market leader in the grocery industry, Kroger differentiates itself through its extensive private-label offerings, customer loyalty programs, and growing alternative revenue streams from advertising and data analytics. The current investor narrative centers on margin compression and a soft earnings outlook following a recent earnings miss, which has pressured the stock despite solid revenue growth. Additionally, Kroger is viewed as a defensive, recession-resistant dividend play, but its high debt levels and competitive pressures from Walmart and Costco are key debates.…
KR
Kroger
$56.48
Related headlines
Investment Opinion: Should I buy KR Today?
Based on the data, I rate Kroger as a Hold. The consensus analyst rating is Buy with an average target of $70.64, implying 23.2% upside, but the recent earnings miss and margin pressure warrant caution. The stock offers a defensive profile with a low beta of 0.41 and a dividend yield of 2.16%, but the high debt and competitive threats limit upside. The thesis is that Kroger is a value play if margins recover, but the timing is uncertain.
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KR 12-Month Price Forecast
The AI assessment is neutral with medium confidence. Kroger's valuation is attractive on a forward basis, but the recent earnings miss and margin pressure create uncertainty. The stock's low beta and defensive nature provide downside protection, but the lack of growth catalysts limits upside. If margins recover in the next two quarters, the stance would upgrade to bullish; if margins deteriorate further, it would downgrade to bearish.
Wall Street consensus
Most Wall Street analysts maintain a constructive view on Kroger's 12-month outlook, with a consensus price target around $70.64 and implied upside of +25.1% versus the current price.
Average Target
$70.64
0 analysts
Implied Upside
+25.1%
vs. current price
Analyst Count
—
covering this stock
Price Range
$58 - $86
Analyst target range
Kroger has coverage from 22 analysts, with a consensus recommendation of 'Buy' and a mean recommendation score of 2.08 (where 1 is Strong Buy and 5 is Sell). The average target price is $70.64, implying an upside of 23.2% from the current price of $57.32. The distribution leans bullish, with no sell ratings and a mix of Buy and Hold ratings. The high target of $86.00 suggests significant upside potential, while the low target of $58.00 is only slightly above the current price, indicating some analysts see limited downside. The wide range between low and high targets reflects uncertainty about the company's margin recovery and competitive position. Recent ratings actions have been mostly neutral or positive, with no downgrades, suggesting analysts are maintaining a cautiously optimistic stance.
Bulls vs Bears: KR Investment Factors
Kroger presents a classic value-versus-value-trap debate. On the bull side, the stock trades at a forward PE of 10.3x, near historical lows, with a consensus Buy rating and 23% upside to the average target. The defensive nature of the grocery business, low beta, and solid free cash flow provide a safety net. However, the bear case is compelling: the recent earnings miss, squeezed margins, high debt (D/E 4.16x), and persistent underperformance (relative strength -43.7% over 1 year) suggest the stock may continue to decline. The single most important tension is whether Kroger can restore its operating margin to historical levels (around 3-4%) from the current 1.3% operating margin. If margins recover, the stock is undervalued; if not, the low forward PE could be a trap. Currently, the bearish evidence is stronger due to the recent negative momentum and margin pressure, but the valuation provides a margin of safety for patient investors.
Bullish
- Forward PE at 10.3x: Kroger trades at a forward PE of 10.34x, near the low end of its historical range (9x-21x) and at a discount to the broader market. This suggests the stock is priced for a recovery in earnings, offering potential value if margins stabilize.
- Analyst consensus Buy with 23% upside: With 22 analysts, the consensus is Buy (mean score 2.08) and the average target price is $70.64, implying 23.2% upside from the current $57.32. No sell ratings and a high target of $86 indicate meaningful upside potential.
- Defensive business with stable revenue: Kroger's grocery-led model (78% of sales) provides recession-resistant demand. Revenue grew 2.2% YoY in Q1 2026 to $46.12B, and the company generates consistent free cash flow of $2.89B TTM, supporting dividends and debt reduction.
- Strong free cash flow and dividend: TTM free cash flow is $2.89B, and the dividend yield is 2.16% with a payout ratio of 87%. The company has a history of dividend increases, making it attractive for income investors seeking stability.
Bearish
- Earnings miss and margin squeeze: In Q1 2026, net income was only $903M with a net margin of 1.96%, down from prior quarters. The stock crashed 10% on June 18, 2026, after missing earnings and guiding soft, reflecting investor concern over squeezed margins.
- High debt burden: Debt-to-equity is 4.16x, and interest expense was $209M in Q1 2026. This leverage increases financial risk, especially if margins remain depressed or interest rates stay high.
- Negative relative strength: KR has underperformed the S&P 500 by 43.7% over the past year, with a 1-year price change of -22.3%. The stock is in a clear downtrend, trading near its 52-week low of $54.15, indicating persistent selling pressure.
- Elevated trailing PE of 40.3x: Despite the low forward PE, the trailing PE is 40.3x due to depressed earnings (EPS of $0.02 in the last quarter). This suggests that if earnings do not recover, the stock could be overvalued on a historical basis.
KR Technical Analysis
Kroger's stock is in a clear downtrend, with a 1-year price change of -22.26% and a 6-month change of -15.08%. The current price of $57.32 sits at 24% of its 52-week range (low $54.15, high $76.58), indicating the stock is near its lows, which could suggest a value opportunity or a falling knife. The stock has underperformed the S&P 500 significantly, with relative strength of -43.72% over the past year, reflecting persistent selling pressure.
Beta
0.41
0.41x market volatility
Max Drawdown
-26.6%
Largest decline past year
52-Week Range
$54-$77
Price range past year
Annual Return
-23.9%
Cumulative gain past year
| Period | KR Return | S&P 500 |
|---|---|---|
| 1m | -6.7% | +2.4% |
| 3m | -12.6% | +4.7% |
| 6m | -17.7% | +11.7% |
| 1y | -23.9% | +21.3% |
| ytd | -10.3% | +13.4% |
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KR Fundamental Analysis
Kroger's revenue growth is modest but positive, with the most recent quarter (Q1 2026) showing revenue of $46.12 billion, up 2.2% year-over-year. However, growth has been inconsistent, with Q4 2025 revenue of $34.73 billion and Q3 2025 revenue of $33.86 billion, indicating a deceleration from the prior year's levels. The company's revenue segments show non-perishables as the largest contributor at $14.85 billion, followed by perishables at $6.63 billion, but fuel and pharmacy segments are smaller and more volatile. The growth trajectory is stable but unexciting, reflecting the mature grocery industry.
Quarterly Revenue
$46.1B
2026-05
Revenue YoY Growth
+2.2%
YoY Comparison
Gross Margin
23.0%
Latest Quarter
Free Cash Flow
$2.9B
Last 12 Months
Revenue & Net Income Trends (2 Years)
Revenue Breakdown
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Valuation Analysis: Is KR Overvalued?
Given that net income is positive, the PE ratio is the primary valuation metric. The trailing PE is 40.29x, while the forward PE is 10.34x, indicating the market expects significant earnings growth or normalization. The gap between trailing and forward PE is substantial, suggesting that the market is pricing in a recovery from the recent earnings miss. Compared to the industry average, Kroger's forward PE of 10.34x is at a discount to the sector, but the trailing PE is elevated due to depressed earnings. Historically, Kroger's PE has ranged from around 9x to 21x over the past few years, and the current forward PE is near the lower end, suggesting potential value if earnings recover.
PE
40.3x
Latest Quarter
vs. Historical
High-End
5-Year PE Range 9x~21x
vs. Industry Avg
N/A
Industry PE ~N/A*
EV/EBITDA
10.8x
Enterprise Value Multiple
Investment Risk Disclosure
Financial and operational risks are significant. Kroger's debt-to-equity ratio of 4.16x is high, and interest expense of $209M in Q1 2026 consumes a large portion of operating income. The company's net margin is razor-thin at 1.96%, leaving little room for error. Any further margin compression could lead to losses, as seen in Q3 2025 when the company reported a net loss of $1.32B due to one-time charges. Additionally, revenue growth is modest at 2.2% YoY, and the company's reliance on fuel and pharmacy segments, which are volatile, adds uncertainty. The current ratio of 0.80 indicates potential liquidity concerns, though the company generates positive free cash flow of $2.89B TTM.