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Are Investors Undervaluing Kroger (KR) Right Now?

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While the proven Zacks Rank places an emphasis on earnings estimates and estimate revisions to find strong stocks, we also know that investors tend to develop their own individual strategies. With this in mind, we are always looking at value, growth, and momentum trends to discover great companies.

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 tried-and-true metrics and fundamental analysis to find companies that they believe are undervalued at their current share price levels.

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.

Kroger (KR - Free Report) 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 is trading with a P/E ratio of 13.53, which compares to its industry's average of 17.65. Over the last 12 months, KR's Forward P/E has been as high as 15.63 and as low as 10.06, with a median of 11.85.

KR is also sporting a PEG ratio of 2.02. 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 2.31. Over the past 52 weeks, KR's PEG has been as high as 4.89 and as low as 1.35, with a median of 1.96.

Finally, our model also underscores that KR has a P/CF ratio of 4.07. This data point considers a firm's operating cash flow and is frequently used to find companies that are undervalued when considering their solid cash outlook. This stock's P/CF looks attractive against its industry's average P/CF of 10.90. KR's P/CF has been as high as 6.99 and as low as 3.27, with a median of 4.81, all within the past year.

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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