KR
KRThe Kroger Co.
is one of the largest supermarket retailers in the United States. It operates a nationwide network of stores and is known for its strong private-label brands, digital omnichannel strategy, and focus on a seamless customer experience.
Updated: January 14, 2026, 16:00 EST
Investment Opinion: Should I buy KR Today?
Based on the provided analysis, Kroger (KR) presents a challenging investment case with significant near-term headwinds.
Technical & Fundamental Analysis: The stock is technically oversold, trading near its 52-week low, which may indicate limited further downside. However, this weakness is justified by a severe recent deterioration in fundamentals. The company swung to a significant operating loss in its latest quarter, raising serious concerns about profitability and its ability to service debt, as reflected in the negative interest coverage ratio. Key efficiency metrics like Return on Equity have also turned deeply negative.
Valuation & Risk: While valuation metrics like the low Price-to-Sales ratio suggest the market may be undervaluing Kroger's revenue base, this is overshadowed by negative forward-looking earnings multiples. The primary risks are fundamental and operational, stemming from intense margin pressure in the grocery sector, rather than technical or liquidity issues.
Recommendation: HOLD
While the deeply oversold technical position might tempt contrarian investors, the sharp and severe decline in profitability cannot be ignored. Until there are clear signs of a operational turnaround and a return to sustainable profitability, the risk remains elevated. Investors should wait for evidence of margin recovery in subsequent earnings reports before considering a new position. This analysis is for reference only and not investment advice.
KR 12-Month Price Forecast
RockFlow Model Forecast: Three Scenarios for 2026
Based on the provided analysis, here is a 12-month outlook for Kroger (KR):
12-Month Outlook for Kroger (KR)
The 12-month outlook for Kroger is cautious, contingent on its ability to execute a credible operational turnaround. The key catalyst will be evidence of margin stabilization and a return to profitability in upcoming quarterly earnings reports, which could rebuild investor confidence from the current deeply oversold levels. The primary risks remain intensely competitive industry pressures and the company's inability to reverse the severe deterioration in its fundamental metrics, particularly its negative interest coverage and return on equity. Given the absence of a clear catalyst for immediate recovery, the stock is likely to remain range-bound with a potential upside only materializing upon demonstrated operational improvement, suggesting a target range that may initially gravitate towards the high-$50s to mid-$60s as stability returns.
Wall Street Consensus
Most Wall Street analysts are optimistic about KR's 12-month outlook, with consensus target around $62.46, indicating expected upside potential.
Bulls vs Bears: KR Investment Factors
Overall, KR has investment potential but also faces challenges. Here are key factors to weigh before investing.
Bullish
- Strong Share Buyback Program: Board approved additional $2B buyback, boosting shareholder returns.
- Recent Market Outperformance: Stock gained 2.69%, beating S&P 500's 0.16% rise.
- Potential Undervaluation: Analysts suggest Kroger stock may be undervalued currently.
- Quality Company Metrics: Multiple financial metrics indicate strong fundamental quality.
- Strong Institutional Ownership: High institutional ownership provides stability and long-term focus.
Bearish
- Recent Market Cap Decline: Company lost $2.1B in market capitalization recently.
- Mixed Analyst Predictions: Wall Street analysts show uncertainty about future performance.
- Asset Divestiture: Sale of Vitacost.com subsidiary reduces diversification.
- Competitive Retail Pressure: Grocery sector faces intense competition and margin pressures.
- Economic Sensitivity: Retail performance vulnerable to consumer spending fluctuations.
KR Technical Analysis
KR shares have demonstrated notable weakness over recent periods, significantly underperforming the broader market amid a sustained downtrend.
The stock has declined 9.01% over three months, substantially underperforming the market by 12.38%, while its 1-month decline of 1.19% indicates persistent selling pressure. KR's low beta of 0.6 suggests this weakness is stock-specific rather than market-driven, highlighting fundamental concerns.
Currently trading at $61.47, KR sits just 5.8% above its 52-week low of $58.12 and remains distant from its $74.90 high, indicating deeply oversold conditions. The maximum drawdown of -20.27% reinforces the stock's challenged technical position, though its proximity to recent lows suggests limited further downside risk.
| Period | KR Return | S&P 500 |
|---|---|---|
| 1m | -1.2% | +1.3% |
| 3m | -7.8% | +5.7% |
| 6m | -11.1% | +10.6% |
| 1y | +6.4% | +16.5% |
| ytd | -0.8% | +1.1% |
KR Fundamental Analysis
Revenue & Profitability KR's Q3 2025 results show revenue holding steady at approximately $33.9 billion, nearly identical to Q2. However, profitability has sharply deteriorated, with the company posting a significant operating loss of -$1.54 billion and a negative net profit margin of -3.9%. This marks a dramatic reversal from the prior quarter's positive operating income of $863 million, indicating severe pressure on margins.
Financial Health The company's liquidity position is weak, as evidenced by a current ratio below 1.0 and a low quick ratio of 0.45, suggesting potential challenges in meeting short-term obligations. While the debt ratio is moderate at 49%, the interest coverage ratio is deeply negative due to the operating loss, raising concerns about its ability to service debt from current earnings.
Operational Efficiency Operational metrics reflect significant inefficiency, with a deeply negative Return on Equity (-18.7%) and Return on Assets (-2.6%) in Q3. The asset turnover ratio of 0.66 indicates modest efficiency in generating sales from its asset base, but this is overshadowed by the company's inability to translate those sales into profit during the quarter.
Revenue & Net Income Trends (2 Years)
Revenue Breakdown
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Try Now & Get Tesla Stock RewardValuation Analysis: Is KR Overvalued?
Based on the provided metrics, Kroger's valuation presents a mixed picture. The TTM PE ratio of 48.52 appears elevated for a grocery retailer, while the negative forward PE and EV/EBITDA ratios signal that near-term earnings and cash flow projections are concerning. However, the low PS ratio of 0.26 and an exceptionally low PEG ratio of 0.025 suggest the market may be significantly undervaluing the company's sales and future earnings growth potential relative to its current price.
A peer comparison cannot be conclusively performed as industry average data is unavailable. This lack of comparative context makes it difficult to determine whether Kroger's elevated TTM PE and PB ratios or its deeply negative forward-looking multiples are typical for the competitive grocery sector. A definitive valuation assessment would require benchmark data against key competitors to establish an appropriate industry standard.
Investment Risk Disclosure
Volatility Risk: KR exhibits relatively low volatility risk, with a Beta of 0.6 indicating the stock is 40% less volatile than the broader market. However, investors should note the stock experienced a maximum drawdown of -20.27% during the past year, reflecting a moderate potential for capital erosion during market downturns.
Other Risks: The stock presents minimal concerns regarding speculative downside pressure from short selling, given there is no reported short interest. For a company of this size, liquidity is unlikely to be a significant risk, though operational risks inherent to the grocery retail sector, such as intense competition and thin margins, remain the primary considerations.
FAQs
Based on current analysis, I maintain a neutral view on KR. While the stock appears oversold with potential undervaluation based on sales metrics, significant profitability deterioration and weak liquidity raise near-term concerns. This stock may appeal to contrarian investors willing to bet on a turnaround, but requires caution given operational challenges in the competitive grocery sector.
Based on the provided data, Kroger (KR) appears to be overvalued.
While the low Price-to-Sales (PS) ratio of 0.26 and exceptionally low PEG ratio suggest potential undervaluation based on sales and growth, these are overshadowed by critical negative metrics. The trailing P/E of 48.52 is extremely high for a grocery retailer, and the negative forward P/E indicates a projected loss, making traditional earnings-based valuation meaningless. Furthermore, a negative Return on Equity (-18.7%) and a significant operating loss in Q3 2025 severely undermine the company's profitability and justify a low valuation.
The primary reasons for this overvaluation are the company's dramatic deterioration in profitability and weak financial health. The shift from positive operating income to a massive loss, coupled with a negative interest coverage ratio, points to fundamental operational challenges that are not adequately reflected in the current stock price. The market appears to be valuing the company based on its sales volume (low PS ratio) while ignoring the severe profitability crisis.
Based on the provided information, here are the key risks of holding KR stock, ordered by importance:
1. Severe Profitability Crisis: The most immediate risk is a dramatic collapse in profitability, with the company swinging to a significant operating loss and a negative net profit margin, raising existential questions about its current business model. 2. Weak Financial Health and Liquidity: The company faces a risk of being unable to comfortably meet its short-term obligations due to a current ratio below 1.0 and a very low quick ratio, compounded by a negative interest coverage ratio. 3. Stock-Specific Downtrend and Momentum: KR is experiencing a pronounced, stock-specific downtrend, significantly underperforming the market and trading near its 52-week low, reflecting strong negative investor sentiment and fundamental concerns. 4. Intense Industry Competition and Thin Margins: As a grocery retailer, KR remains exposed to the persistent, structural risks of fierce competition and razor-thin operating margins, which have likely contributed to its severe profitability issues.
Based on the weak operational turnaround needed and intense competitive pressures, my forecast for Kroger (KR) through 2026 is cautious.
* Target Price Range: I project a base case of $60 - $65 and a bull case of $70 - $75, contingent on a successful margin recovery. * Key Growth Drivers: The primary catalysts are 1) evidence of sustained margin stabilization and a return to profitability, and 2) successful cost-cutting initiatives to improve operational efficiency. * Main Assumptions: This forecast assumes management can execute a credible turnaround to address negative profitability and weak liquidity, though this is not guaranteed. * Uncertainty: The forecast carries high uncertainty; failure to improve fundamental metrics like interest coverage and return on equity could lead to further downside.