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The Kroger Co KR

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Morningstar’s Analysis

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1-Star Price

PREMIUM

5-Star Price

PREMIUM

Economic Moat

PREMIUM

Capital Allocation

PREMIUM

Kroger Posts Solid Second-Quarter Results Despite Difficult Year-on-Year Comparisons

Zain Akbari, CFA Equity Analyst

Analyst Note

| Zain Akbari, CFA |

Despite comparisons to the peak of pandemic-related stockpiling last year, narrow-moat Kroger’s second-quarter results were solid, and we do not expect to change our $37 per share valuation much. Our take is more optimistic than market reaction to the news (the shares dipped by a mid- to high-single-digit percentage after the release), but we believed the shares were priced assuming near-perfection heading into the earnings report. Notwithstanding the trading price drop, we suggest investors await a more attractive entry point.

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Company Profile

Business Description

Kroger is the leading American grocer, with 2,742 supermarkets operating under several banners throughout the country as of the end of fiscal 2020. Around 82% of stores have pharmacies, while over half also sell fuel. The company also operated more than 150 fine jewelry stores at the end of fiscal 2020. Kroger features a leading private-label offering and manufactures around 30% of its own-brand units (and 40% of its grocery own-label assortment) itself, in 35 food production plants nationwide. Kroger is a top-two grocer in most of its major markets (as of early 2021, according to company data). Virtually all of Kroger's sales come from the United States.

Contact
1014 Vine Street
Cincinnati, OH, 45202
T +1 513 762-4000
Sector Consumer Defensive
Industry Grocery Stores
Most Recent Earnings Jul 31, 2021
Fiscal Year End Jan 29, 2022
Stock Type Classic Growth
Employees 465,000

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