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Should Value Investors Buy The Kroger Co. (KR) Stock?
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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.
Considering these trends, value investing is clearly one of the most preferred ways to find strong stocks in any type of market. Value investors use a variety of methods, including tried-and-true valuation metrics, to find these stocks.
Luckily, Zacks has developed its own Style Scores system in an effort to find stocks with specific traits. Value investors will be interested in the system's "Value" category. Stocks with both "A" grades in the Value category and high Zacks Ranks are among the strongest value stocks on the market right now.
One company to watch right now is The Kroger Co. (KR - Free Report) . KR is currently sporting a Zacks Rank of #1 (Strong Buy) and an A for Value. The stock is trading with a P/E ratio of 10.59, which compares to its industry's average of 21.74. Over the past 52 weeks, KR's Forward P/E has been as high as 15.58 and as low as 10.15, with a median of 11.37.
Investors should also note that KR holds a PEG ratio of 1.77. This popular figure is similar to the widely-used P/E ratio, but the PEG ratio also considers a company's expected EPS growth rate. KR's PEG compares to its industry's average PEG of 3.88. Over the last 12 months, KR's PEG has been as high as 1.86 and as low as 0.87, with a median of 1.25.
Another valuation metric that we should highlight is KR's P/B ratio of 3.42. 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. This stock's P/B looks attractive against its industry's average P/B of 4.15. KR's P/B has been as high as 4.55 and as low as 3.08, with a median of 3.47, over the past year.
Value investors also love the P/S ratio, which is calculated by simply dividing a stock's price with the company's sales. This is a prefered metric because revenue can't really be manipulated, so sales are often a truer performance indicator. KR has a P/S ratio of 0.23. This compares to its industry's average P/S of 0.27.
Finally, we should also recognize that KR has a P/CF ratio of 5.78. This metric takes into account a company's operating cash flow and can be used to find stocks that are undervalued based on their solid cash outlook. This company's current P/CF looks solid when compared to its industry's average P/CF of 17.24. Over the past 52 weeks, KR's P/CF has been as high as 8.52 and as low as 5.14, with a median of 5.81.
Investors could also keep in mind Tesco (TSCDY - Free Report) , an Retail - Supermarkets stock with a Zacks Rank of # 2 (Buy) and Value grade of A.
Shares of Tesco are currently trading at a forward earnings multiple of 13.65 and a PEG ratio of 2.87 compared to its industry's P/E and PEG ratios of 21.74 and 3.88, respectively.
Over the last 12 months, TSCDY's P/E has been as high as 13.77, as low as 9.09, with a median of 11.60, and its PEG ratio has been as high as 4.15, as low as 0.32, with a median of 3.34.
Tesco also has a P/B ratio of 1.48 compared to its industry's price-to-book ratio of 4.15. Over the past year, its P/B ratio has been as high as 1.49, as low as 0.99, with a median of 1.20.
These figures are just a handful of the metrics value investors tend to look at, but they help show that The Kroger Co. and Tesco are likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, KR and TSCDY feels like a great value stock at the moment.
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Should Value Investors Buy The Kroger Co. (KR) Stock?
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.
Considering these trends, value investing is clearly one of the most preferred ways to find strong stocks in any type of market. Value investors use a variety of methods, including tried-and-true valuation metrics, to find these stocks.
Luckily, Zacks has developed its own Style Scores system in an effort to find stocks with specific traits. Value investors will be interested in the system's "Value" category. Stocks with both "A" grades in the Value category and high Zacks Ranks are among the strongest value stocks on the market right now.
One company to watch right now is The Kroger Co. (KR - Free Report) . KR is currently sporting a Zacks Rank of #1 (Strong Buy) and an A for Value. The stock is trading with a P/E ratio of 10.59, which compares to its industry's average of 21.74. Over the past 52 weeks, KR's Forward P/E has been as high as 15.58 and as low as 10.15, with a median of 11.37.
Investors should also note that KR holds a PEG ratio of 1.77. This popular figure is similar to the widely-used P/E ratio, but the PEG ratio also considers a company's expected EPS growth rate. KR's PEG compares to its industry's average PEG of 3.88. Over the last 12 months, KR's PEG has been as high as 1.86 and as low as 0.87, with a median of 1.25.
Another valuation metric that we should highlight is KR's P/B ratio of 3.42. 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. This stock's P/B looks attractive against its industry's average P/B of 4.15. KR's P/B has been as high as 4.55 and as low as 3.08, with a median of 3.47, over the past year.
Value investors also love the P/S ratio, which is calculated by simply dividing a stock's price with the company's sales. This is a prefered metric because revenue can't really be manipulated, so sales are often a truer performance indicator. KR has a P/S ratio of 0.23. This compares to its industry's average P/S of 0.27.
Finally, we should also recognize that KR has a P/CF ratio of 5.78. This metric takes into account a company's operating cash flow and can be used to find stocks that are undervalued based on their solid cash outlook. This company's current P/CF looks solid when compared to its industry's average P/CF of 17.24. Over the past 52 weeks, KR's P/CF has been as high as 8.52 and as low as 5.14, with a median of 5.81.
Investors could also keep in mind Tesco (TSCDY - Free Report) , an Retail - Supermarkets stock with a Zacks Rank of # 2 (Buy) and Value grade of A.
Shares of Tesco are currently trading at a forward earnings multiple of 13.65 and a PEG ratio of 2.87 compared to its industry's P/E and PEG ratios of 21.74 and 3.88, respectively.
Over the last 12 months, TSCDY's P/E has been as high as 13.77, as low as 9.09, with a median of 11.60, and its PEG ratio has been as high as 4.15, as low as 0.32, with a median of 3.34.
Tesco also has a P/B ratio of 1.48 compared to its industry's price-to-book ratio of 4.15. Over the past year, its P/B ratio has been as high as 1.49, as low as 0.99, with a median of 1.20.
These figures are just a handful of the metrics value investors tend to look at, but they help show that The Kroger Co. and Tesco are likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, KR and TSCDY feels like a great value stock at the moment.