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The Kroger Co. KR stands out as a compelling value play within the Retail-Supermarkets industry, trading at a forward 12-month price-to-earnings (P/E) ratio of 13.90, well below the industry average of 33.22 and the Retail-Wholesale sector average of 23.96. This undervaluation highlights its potential for investors seeking attractive entry points in the retail space. KR's Value Score of A supports its investment appeal.
Kroger's stock is also trading at a discount compared with its peers, including Walmart Inc. WMT, Sprouts Farmers Market, Inc. SFM and Grocery Outlet Holding Corp. GO.
Walmart, Sprouts Farmers and Grocery Outlet trade at a forward 12-month P/E of 35.82, 30.27 and 17.36, respectively, highlighting KR’s relative valuation advantage.
KR Looks Attractive From a Valuation Standpoint
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Closing at $67.49 yesterday, shares of Kroger are currently trading 8.3% below its 52-week high of $73.63 reached on April 22, 2025, making investors contemplate their next move. In the past three months, the Kroger stock has gained 3.6%, significantly outperforming the industry’s 6.1% fall. The company’s strategic initiative and operational efficiencies have helped it outpace the broader sector and the S&P 500 index’s respective declines of 5.8% and 5% in the same period.
Kroger Stock’s Past 3-Month Performance
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KR fuels growth through digital expansion, strong performance of private label brands, fresh product offerings and partnerships. Ongoing investments in AI and value-driven initiatives support its long-term growth potential. The Kroger stock has also outpaced its peers, with shares of Walmart, Sprouts Farmers Market and Grocery Outlet declining 7.8%, 10.5% and 17.8%, respectively, over the past three months.
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This leading traditional supermarket chain is trading above its 100 and 200-day SMAs (simple moving averages) of $65.07 and $60.36, respectively, highlighting a continued uptrend. This technical strength, along with sustained momentum, indicates positive market sentiment and investors’ confidence in KR’s financial health and growth prospects.
KR Trades Above 100 & 200-Day Moving Averages
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Decoding Kroger’s Tailwinds
KR continues to solidify its presence in the retail sector through a customer-centric strategy, high-quality fresh food offerings, and a growing private-label portfolio under its "Our Brands" banner. In 2024, above 90% of households purchased “Our Brands” products, and the company launched more than 900 items, including 370 fresh items, reinforcing its innovation pipeline.
Digital transformation remains a cornerstone of Kroger's growth strategy. Initiatives like the Boost membership program, Delivery Now, and the expansion of customer fulfillment centers have significantly boosted digital engagement. In the fourth quarter, digital sales rose 11%, fueled by increased household participation and higher traffic.
KR's investments in automation and AI-driven inventory management have enhanced operational efficiency, reduced waste and improved margins, positioning the company for scalable long-term growth.
Kroger's alternative profit businesses also delivered strong results, generating $1.35 billion in operating profit in 2024. This growth was supported by a 17% increase in media revenues, underscoring the success of KR's digital engagement strategies. These high-margin revenue streams serve as critical components of Kroger's business model, offering a diversified income source.
Health and Wellness emerged as a key area of strength, particularly in the latter half of 2024. Strong vaccine performance helped offset margin pressures stemming from growth in GLP-1 sales, contributing positively to overall revenues. Kroger's strategic renewal of its agreement with Express Scripts expanded its health services, providing ESI customers with access to prescription medications and health services at Kroger Pharmacies.
From digital innovation and private-label growth to alternative profits and disciplined capital allocation, Kroger is executing across multiple fronts. KR's guidance for 2025 reflects confidence in sustained growth, with expectations for identical sales without fuel to increase 2-3%. Stable margin rates and adjusted earnings per share between $4.60 and $4.80 reinforce a positive outlook and financial stability.