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Is Kroger Stock a Buy as Value Meets Slower Comparable-Sales Growth?
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Key Takeaways
Kroger's fiscal Q2 adjusted EPS rose 4.8%, while identical sales excluding fuel increased just 0.2%.
Kroger cut fiscal 2026 identical-sales guidance to 0.2%-0.8% but kept EPS guidance at $5.10-$5.30.
Kroger's e-commerce sales rose 20%, while Private Selection sales increased more than 14%.
The Kroger Co. (KR - Free Report) presents a valuation-versus-execution trade-off. Its discounted earnings multiple, improving digital economics and expanding private-label business support the case for value, while softer comparable-sales growth and persistent operating pressures keep the near-term picture mixed.
The question is whether the current discount sufficiently compensates for slower sales momentum. Kroger’s latest results show that earnings can hold up even when the top line is less supportive, but clearer sales acceleration would strengthen the case.
Kroger trades at 10.78X forward 12-month earnings, below its five-year median of 12.08X. The multiple also sits below 30.68X for the Zacks sub-industry, 20.83X for the Zacks Retail-Wholesale sector and 19.66X for the S&P 500.
That discount is consistent with Kroger’s Value Score of A. Still, valuation does not eliminate execution risk. The stock’s lower multiple must be weighed against slower comparable-sales growth and the need for continued investment in pricing, stores and fulfillment.
Image Source: Zacks Investment Research
KR’s Earnings Hold Up as Sales Momentum Slows
Second-quarter fiscal 2026 adjusted earnings rose 4.8% year over year to $1.09 per share and topped the Zacks Consensus Estimate of $1.05. Total sales increased 2% to $34.62 billion but missed the consensus mark of $34.69 billion.
Identical sales excluding fuel rose only 0.2%, down from 3.4% growth a year earlier. Kroger lowered fiscal 2026 identical-sales guidance excluding fuel to 0.2%-0.8% from 1%-2%, while maintaining adjusted earnings guidance of $5.10-$5.30 per share.
Kroger’s Growth Engines Still Have Support
Adjusted e-commerce sales increased 20% in the quarter, and Kroger delivered a second consecutive quarter of profitable e-commerce growth when combined with retail media. Kroger Precision Marketing profit climbed 24%, its best growth rate since 2021.
Our Brands also outpaced national brands by 250 basis points. Private Selection sales increased more than 14%, while Our Brands penetration rose about 50 basis points. These businesses give Kroger growth and profit levers that extend beyond core grocery comparable sales.
KR Faces Cost and Consumer Spending Pressure
Higher shrink, transportation costs, healthcare expenses and planned wage investments weighed on profitability, while management expects additional diesel and freight pressure through the rest of fiscal 2026. Customers are also buying more on need as household budgets remain pressured.
Competition adds another layer. Walmart Inc. (WMT - Free Report) reported 2.6% U.S. comparable-sales growth excluding fuel and 24% U.S. e-commerce growth in its latest quarter. Costco Wholesale Corporation (COST - Free Report) posted 7.2% adjusted U.S. comparable-sales growth and 19.8% adjusted digitally enabled growth in its fiscal fourth quarter, underscoring a retail environment where value and convenience remain central.
Kroger’s Signals Favor Patience Over Momentum
Kroger’s valuation and higher-growth businesses provide support, but muted identical-sales growth and ongoing cost pressure keep the setup balanced. The operating model is still producing earnings growth, yet the next step in the case depends on stronger sales productivity and sustained margin execution.
The stock currently carries a Zacks Rank #3 (Hold), with a VGM Score of A, Value Score of A, Growth Score of B and Momentum Score of D. The favorable value and growth characteristics contrast with weaker near-term momentum. For investors weighing Kroger today, that combination supports a measured, wait-and-see view rather than a momentum-driven conclusion. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
View the Zacks #1 Rank List
Image: Bigstock
Is Kroger Stock a Buy as Value Meets Slower Comparable-Sales Growth?
Key Takeaways
The Kroger Co. (KR - Free Report) presents a valuation-versus-execution trade-off. Its discounted earnings multiple, improving digital economics and expanding private-label business support the case for value, while softer comparable-sales growth and persistent operating pressures keep the near-term picture mixed.
The question is whether the current discount sufficiently compensates for slower sales momentum. Kroger’s latest results show that earnings can hold up even when the top line is less supportive, but clearer sales acceleration would strengthen the case.
The Kroger Co. Price, Consensus and EPS Surprise
The Kroger Co. price-consensus-eps-surprise-chart | The Kroger Co. Quote
Kroger’s Valuation Leaves Room for Debate
Kroger trades at 10.78X forward 12-month earnings, below its five-year median of 12.08X. The multiple also sits below 30.68X for the Zacks sub-industry, 20.83X for the Zacks Retail-Wholesale sector and 19.66X for the S&P 500.
That discount is consistent with Kroger’s Value Score of A. Still, valuation does not eliminate execution risk. The stock’s lower multiple must be weighed against slower comparable-sales growth and the need for continued investment in pricing, stores and fulfillment.
Image Source: Zacks Investment Research
KR’s Earnings Hold Up as Sales Momentum Slows
Second-quarter fiscal 2026 adjusted earnings rose 4.8% year over year to $1.09 per share and topped the Zacks Consensus Estimate of $1.05. Total sales increased 2% to $34.62 billion but missed the consensus mark of $34.69 billion.
Identical sales excluding fuel rose only 0.2%, down from 3.4% growth a year earlier. Kroger lowered fiscal 2026 identical-sales guidance excluding fuel to 0.2%-0.8% from 1%-2%, while maintaining adjusted earnings guidance of $5.10-$5.30 per share.
Kroger’s Growth Engines Still Have Support
Adjusted e-commerce sales increased 20% in the quarter, and Kroger delivered a second consecutive quarter of profitable e-commerce growth when combined with retail media. Kroger Precision Marketing profit climbed 24%, its best growth rate since 2021.
Our Brands also outpaced national brands by 250 basis points. Private Selection sales increased more than 14%, while Our Brands penetration rose about 50 basis points. These businesses give Kroger growth and profit levers that extend beyond core grocery comparable sales.
KR Faces Cost and Consumer Spending Pressure
Higher shrink, transportation costs, healthcare expenses and planned wage investments weighed on profitability, while management expects additional diesel and freight pressure through the rest of fiscal 2026. Customers are also buying more on need as household budgets remain pressured.
Competition adds another layer. Walmart Inc. (WMT - Free Report) reported 2.6% U.S. comparable-sales growth excluding fuel and 24% U.S. e-commerce growth in its latest quarter. Costco Wholesale Corporation (COST - Free Report) posted 7.2% adjusted U.S. comparable-sales growth and 19.8% adjusted digitally enabled growth in its fiscal fourth quarter, underscoring a retail environment where value and convenience remain central.
Kroger’s Signals Favor Patience Over Momentum
Kroger’s valuation and higher-growth businesses provide support, but muted identical-sales growth and ongoing cost pressure keep the setup balanced. The operating model is still producing earnings growth, yet the next step in the case depends on stronger sales productivity and sustained margin execution.
The stock currently carries a Zacks Rank #3 (Hold), with a VGM Score of A, Value Score of A, Growth Score of B and Momentum Score of D. The favorable value and growth characteristics contrast with weaker near-term momentum. For investors weighing Kroger today, that combination supports a measured, wait-and-see view rather than a momentum-driven conclusion. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.