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Are Investors Undervaluing The Kroger Co. (KR) Right Now?
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Here at Zacks, we focus on our proven ranking system, which places an emphasis on earnings estimates and estimate revisions, to find winning stocks. But we also understand that investors develop their own strategies, so we are constantly looking at the latest trends in value, growth, and momentum to find strong companies for our readers.
Looking at the history of these trends, perhaps none is more beloved than value investing. This strategy simply looks to identify companies that are being undervalued by the broader market. Value investors rely on traditional forms of analysis on key valuation metrics to find stocks that they believe are undervalued, leaving room for profits.
Zacks has developed the innovative Style Scores system to highlight stocks with specific traits. For example, value investors will be interested in stocks with great grades in the "Value" category. When paired with a high Zacks Rank, "A" grades in the Value category are among the strongest value stocks on the market today.
One company to watch right now is The Kroger Co. (KR - Free Report) . KR is currently sporting a Zacks Rank #2 (Buy) and an A for Value. The stock is trading with a P/E ratio of 12.9, which compares to its industry's average of 35.87. Over the last 12 months, KR's Forward P/E has been as high as 15.11 and as low as 11.97, with a median of 13.54.
We also note that KR holds a PEG ratio of 1.80. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. KR's industry has an average PEG of 3.93 right now. Within the past year, KR's PEG has been as high as 3.07 and as low as 0.83, with a median of 2.03.
Investors should also recognize that KR has a P/B ratio of 4.67. The P/B ratio pits a stock's market value against 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 8.52. Over the past 12 months, KR's P/B has been as high as 5.82 and as low as 3.13, with a median of 4.96.
Value investors also frequently use the P/S ratio. This metric is found by dividing a stock's price with the company's revenue. Some people prefer this metric because sales are harder to manipulate on an income statement. This means it could be a truer performance indicator. KR has a P/S ratio of 0.26. This compares to its industry's average P/S of 0.32.
These figures are just a handful of the metrics value investors tend to look at, but they help show that The Kroger Co. 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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Are Investors Undervaluing The Kroger Co. (KR) Right Now?
Here at Zacks, we focus on our proven ranking system, which places an emphasis on earnings estimates and estimate revisions, to find winning stocks. But we also understand that investors develop their own strategies, so we are constantly looking at the latest trends in value, growth, and momentum to find strong companies for our readers.
Looking at the history of these trends, perhaps none is more beloved than value investing. This strategy simply looks to identify companies that are being undervalued by the broader market. Value investors rely on traditional forms of analysis on key valuation metrics to find stocks that they believe are undervalued, leaving room for profits.
Zacks has developed the innovative Style Scores system to highlight stocks with specific traits. For example, value investors will be interested in stocks with great grades in the "Value" category. When paired with a high Zacks Rank, "A" grades in the Value category are among the strongest value stocks on the market today.
One company to watch right now is The Kroger Co. (KR - Free Report) . KR is currently sporting a Zacks Rank #2 (Buy) and an A for Value. The stock is trading with a P/E ratio of 12.9, which compares to its industry's average of 35.87. Over the last 12 months, KR's Forward P/E has been as high as 15.11 and as low as 11.97, with a median of 13.54.
We also note that KR holds a PEG ratio of 1.80. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. KR's industry has an average PEG of 3.93 right now. Within the past year, KR's PEG has been as high as 3.07 and as low as 0.83, with a median of 2.03.
Investors should also recognize that KR has a P/B ratio of 4.67. The P/B ratio pits a stock's market value against 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 8.52. Over the past 12 months, KR's P/B has been as high as 5.82 and as low as 3.13, with a median of 4.96.
Value investors also frequently use the P/S ratio. This metric is found by dividing a stock's price with the company's revenue. Some people prefer this metric because sales are harder to manipulate on an income statement. This means it could be a truer performance indicator. KR has a P/S ratio of 0.26. This compares to its industry's average P/S of 0.32.
These figures are just a handful of the metrics value investors tend to look at, but they help show that The Kroger Co. 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.