KR
The Kroger Co.$71.57
Sell
Target $53.12
Report: Mar 07, 2026Consumer Defensive • Grocery Stores • Asset-Based OperatorSnapshot
Decision-first overview with recommendation, valuation anchor, and current setup.
Company Overview
Research Snapshot
Price History
Pelican View
Current$71.57-25.8%
Rec: SellConviction: High
Entry Target
N/A
N/A
Fair Value
$53.12
(26% below current)
Stop Loss
N/A
N/A
Position Size
None
Time Horizon
N/A
Key Metrics
Live Snapshot
Market Data
52 Week High$76.58
52 Week Low$58.60
Avg. 3 Month Volume6.99M
Efficiency
LTM Gross Margin23.3%
LTM EBITDA Margin3.9%
LTM EBIT Margin1.2%
LTM Operating Margin1.3%
LTM ROA2.0%
LTM ROE13.0%
LTM ROIC3.5%
LTM ROCE5.2%
Capital Structure
Market Cap (MM)$44.3B
Enterprise Value (MM)$65.7B
Shares Outstanding631.00M
Total Debt (MM)$24.69B
Cash & Equivalents (MM)$3.33B
LTM Net Debt (MM)$21.36B
LTM Net Debt/EBITDA3.7x
Growth
TTM Rev. Growth0.4%
Last 3-Yr Rev. CAGR-0.1%
Last 3-Yr EBITDA CAGR-6.4%
Last 3-Yr EPS CAGR-21.3%
Valuation
Street Target Price$74.25
LTM EV/Revenue0.4x
LTM EV/Gross Profit1.9x
LTM EV/EBIT35.9x
LTM EV/EBITDA11.4x
LTM P/E43.6x
LTM EV/FCF18.6x
LTM P/FCF12.5x
LTM P/TB1.0x
LTM P/B7.5x
Dividend Yield1.9%
Payout Ratio90.7%
Executive SummarySituation: Current price is $71.57 versus fair value $53.12 (-25.8% expected return), and valuation confidence is stable. Debate: Bull case depends on E-commerce Strategic Review Outcome Management expects the shift to a hybrid store-based fulfillment model to deliver a $400 million operating profit improvement in 2026. Bear case centers on Margin Erosion from Price Investments Kroger's strategy of reinvesting cost savings into lower prices to gain market share may fail to drive sufficient volume, leading to a permanent reduction in operating margins below the current 1.1%. Conclusion: Recommendation is Sell with no position, pending a materially better risk/reward setup.
Bull Case
New CEO Greg Foran successfully applies Walmart-style operational rigor to drive 20 consecutive quarters of positive identical sales; e-commerce reaches profitability in 2026 via a hybrid store-based model.
Bear Case
Razor-thin margins of 1.1% are permanently eroded by wage inflation and price wars; high leverage (3.9x Net Debt/EBITDA) leads to a credit rating downgrade as interest coverage falls below 2.3x.
Key Catalysts
Near-Term (0-6 months)Impact: High
E-commerce Strategic Review Outcome Management expects the shift to a hybrid store-based fulfillment model to deliver a $400 million operati...
Mid-Term (6-18 months)Impact: Critical
Debt Refinancing and Leverage Re-rating As the company moves toward its target leverage of 2.3-2.5x, the market will focus on its ability to...
Long-Term (18+ months)Impact: Moderate
Kroger is at a critical juncture following the appointment of Greg Foran and the definitive end of the Albertsons merger, making the next tw...
Primary Risks
Concern: High
Margin Erosion from Price Investments Kroger's strategy of reinvesting cost savings into lower prices to gain market share may fail to drive...
Concern: Medium
Asset Obsolescence and Impairment The $2.6 billion impairment of fulfillment centers suggests that Kroger's physical and digital assets may...
Concern: Medium
The governance outcome tree suggests significant risk. 1. Status Quo: Foran's operational fixes take years to manifest while debt service ea...
Recent Activity
2026-03-05SEC Filing (8-K)
+5.34%Kroger reported Q4 and FY 2025 results with strong sales growth and announced 2026 guidance.
2025-04-03Market Movement
+5.16%Market/Sector Move +5.16%
2024-09-12SEC Filing (8-K)
+7.18%Kroger extends exchange offers and consent solicitations for Albertsons Companies notes
2024-03-07SEC Filing (8-K)
+9.88%Kroger reported Q4 and FY 2023 results with strong performance and provided 2024 guidance.
2023-03-02SEC Filing (8-K)
+5.42%Kroger reported Q4 and full-year 2022 results with 6.2% identical sales growth and provided 2023 guidance.
Valuation Table
9.8/10Decision Grade
Scenario Range
$0
Bear
$48
Base
$67
Bull
$72