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Are Investors Undervaluing Kroger (KR) Right Now?

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.

Of these, perhaps no stock market trend is more popular than value investing, which is a strategy that has proven to be successful in all sorts of market environments. Value investors rely on traditional forms of analysis on key valuation metrics to find stocks that they believe are undervalued, leaving room for profits.

In addition to the Zacks Rank, investors looking for stocks with specific traits can utilize our Style Scores system. Of course, value investors will be most interested in the system's "Value" category. Stocks with "A" grades for Value and high Zacks Ranks are among the best value stocks available at any given moment.

Kroger (KR) is a stock many investors are watching right now. 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 12.97, while its industry has an average P/E of 22.22. KR's Forward P/E has been as high as 14.46 and as low as 9.24, with a median of 11.88, all within the past year.

Investors should also note that KR holds a PEG ratio of 2.66. 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 4.22. Over the past 52 weeks, KR's PEG has been as high as 2.83 and as low as 1.34, with a median of 1.88.

Investors should also recognize that KR has a P/B ratio of 2.91. Investors use the P/B ratio to look at a stock's market value versus its book value, which is defined as total assets minus total liabilities. KR's current P/B looks attractive when compared to its industry's average P/B of 3.64. KR's P/B has been as high as 3.19 and as low as 1.95, with a median of 2.50, over the past year.

Finally, investors will want to recognize that KR has a P/CF ratio of 5.21. This metric focuses on a firm's operating cash flow and is often used to find stocks that are undervalued based on the strength of their cash outlook. This stock's P/CF looks attractive against its industry's average P/CF of 11.67. Over the past 52 weeks, KR's P/CF has been as high as 5.64 and as low as 3.68, with a median of 4.77.

These figures are just a handful of the metrics value investors tend to look at, but they help show that Kroger is likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, KR feels like a great value stock at the moment.


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