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The Kroger Co KR

Morningstar Rating
$48.53 +0.16 (0.33%)
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Company Report

Kroger, Albertsons: As We Expected, Federal Trade Commission Sues to Block the Combination

After reviewing narrow-moat Kroger and no-moat Albertsons' planned merger for over a year, the US Federal Trade Commission ultimately deemed the nearly $25 billion deal anticompetitive and sued on Feb. 26 to block it. We have long held that the merger would face insurmountable regulatory scrutiny, thus to us, the decision was not unexpected. While the timing of future litigation and the ultimate court ruling remain uncertain, we still view the proposed deal as unlikely to close, and we do not plan to alter our $53 and $27 per share fair value estimates for Kroger and Albertsons, respectively.

Price vs Fair Value

KR is trading at a 8% discount.
Price
$48.53
Fair Value
$99.00
Uncertainty
Medium
1-Star Price
$48.84
5-Star Price
$89.80
Economic Moat
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Capital Allocation
Vswfkzftg

Bulls Say, Bears Say

Bulls

With a number-one or -two standing in most of its major markets, Kroger benefits from local scale, spreading advertising, distribution, and supply chain expenses over a large sales base.

Bears

Competition in grocery from physical and digital sellers alike is fierce, necessitating continued investment in the store experience and low prices to maintain store traffic.

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News

Trading Information

Previous Close Price
$48.37
Day Range
$48.4048.90
52-Week Range
$42.1050.36
Bid/Ask
$47.62 / $49.07
Market Cap
$34.91 Bil
Volume/Avg
4.1 Mil / 5.0 Mil

Key Statistics

Price/Earnings (Normalized)
11.13
Price/Sales
0.24
Dividend Yield (Trailing)
2.33%
Dividend Yield (Forward)
2.39%
Total Yield
2.37%

Company Profile

Kroger is the leading U.S. grocer, with 2,719 supermarkets operating under several banners throughout the country at the end of fiscal 2022. Around 83% of stores have pharmacies, while nearly 60% also sell fuel. The company also operates roughly 120 fine jewelry stores. Kroger features a leading private-label offering and manufactures around 30% of its own-brand units (and more than 40% of its grocery own-label assortment) itself in 33 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. Kroger has offered to acquire Albertsons in a $25 billion deal; if the transaction is approved by regulators, it should close in 2024.
Sector
Consumer Defensive
Industry
Grocery Stores
Stock Style Box
Mid Value
Total Number of Employees
430,000

Competitors

Valuation

Metric
KR
ACI
COST
Price/Earnings (Normalized)
11.136.5351.34
Price/Book Value
3.114.6712.69
Price/Sales
0.240.151.35
Price/Cash Flow
5.753.0432.41
Price/Earnings
KR
ACI
COST

Financial Strength

Metric
KR
ACI
COST
Quick Ratio
0.290.130.55
Current Ratio
0.800.851.09
Interest Coverage
6.563.8751.15
Quick Ratio
KR
ACI
COST

Profitability

Metric
KR
ACI
COST
Return on Assets (Normalized)
6.42%6.80%10.40%
Return on Equity (Normalized)
30.83%100.04%29.91%
Return on Invested Capital (Normalized)
11.67%13.40%20.67%
Return on Assets
KR
ACI
COST
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Grocery Stores Industry Comparables

Ticker
Name
Morningstar Rating for Stocks
Economic Moat
Market Cap
SVNDF
Seven & i Holdings Co LtdFttldy$36.7 Bil
SVNDY
Seven & i Holdings Co Ltd ADRMcbvgck$36.7 Bil
LBLCF
Loblaw Companies LtdGblwt$33.7 Bil
AHODF
Koninklijke Ahold Delhaize NVKfkd$28.4 Bil
ADRNY
Koninklijke Ahold Delhaize NV ADRKwlg$28.4 Bil
WOLWF
Woolworths Group LtdXvbnjk$26.1 Bil
TSCDY
Tesco PLC ADRJtyt$24.8 Bil
TSCDF
Tesco PLCRljc$24.8 Bil
ACI
Albertsons Companies Inc Class AWmz$11.8 Bil

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