KROGER CO (KR) Stock Analysis
KROGER CO (KR) Stock Analysis
Analysis from 10-Q filed 2025-12-12. Data as of Q4 2025.
Overall Grade: F (Concerning)
KROGER CO faces challenges in financial performance that warrant careful analysis.
| Metric | Value | Context |
|---|---|---|
| ROIC | 4.2% | Below expectations |
| FCF Margin | 1.5% | Cash flow pressure |
| Debt/Equity | 2.3x | Elevated debt |
Investment Thesis: Financial metrics indicate concerning business quality with areas requiring attention.
Explore KROGER CO: Earnings History | Filing Intelligence | ROIC Analysis
Profitability: KROGER CO earns 4.2% ROIC, Bottom 50% in Consumer Discretionary
KROGER CO's trailing-twelve-month ROIC of 4.2% ranks Bottom 50% in Consumer Discretionary companies (sector median: 8.4%), driven by NOPAT margin of 1.0% combined with asset turnover of 2.7x. Source: 10-Q filed 2025-12-12. Gross margin of 23.2% with operating margin at 1.1% reflects a competitive pricing environment.
| Metric | KR | Rating | Context |
|---|---|---|---|
| Return on Invested Capital (ROIC) | 4.2% | Warning | Below sector median of 8.4% |
| Return on Equity (ROE) | 8.5% | Adequate | Moderate equity returns |
| Gross Margin | 23.2% | Adequate | Competitive pricing environment |
| Operating Margin | 1.1% | Warning | Moderate operational efficiency |
Cash Flow: KROGER CO generates $2.3B FCF at 1.5% margin, positive NaN/8 quarters
KROGER CO generated $2.3B in free cash flow (TTM), a 1.5% FCF margin, a margin that ranks Bottom 50% in Consumer Discretionary. Operating cash flow exceeds net income by 7.8x, indicating high earnings quality. FCF was positive in N/A of the last 8 quarters. Source: 10-Q filed 2025-12-12.
| Metric | KR | Rating | Context |
|---|---|---|---|
| Free Cash Flow Margin | 1.5% | Warning | Thin cash margins |
| Free Cash Flow (TTM) | $2.3B | Good | Positive cash generation |
| OCF/Net Income | 7.8x | Excellent | High earnings quality |
| FCF Consistency (8Q) | N/A | Warning | Variable cash flow |
Balance Sheet: KROGER CO at 2.3x leverage
KROGER CO's debt-to-equity ratio of 2.3x reflects high leverage. Total debt of $16.0B offset by $4.0B in cash. Source: 10-Q filed 2025-12-12.
| Metric | KR | Rating | Context |
|---|---|---|---|
| Debt to Equity | 2.3x | Warning | Elevated leverage |
| Net Cash Position | $-12.0B | Warning | Net debt position |
Valuation: KROGER CO trades at 59.0x earnings
KROGER CO trades at a P/E of 59.0x. Free cash flow yield of 5.2% offers attractive cash returns relative to price.
| Metric | KR | Rating | Context |
|---|---|---|---|
| P/E Ratio | 59.0x | Warning | Premium valuation |
| EV/Sales | 0.4x | Excellent | Attractive revenue multiple |
| FCF Yield | 5.2% | Good | Attractive cash return |
| Dividend Yield | 2.1% | Adequate | Growth focus over income |
Capital Allocation: KROGER CO returns 13.6% shareholder yield
KROGER CO's total shareholder yield is 13.6% (dividends 2.1% + buybacks 11.5%). Source: 10-Q filed 2025-12-12.
| Metric | KR | Rating | Context |
|---|---|---|---|
| Total Shareholder Yield | 13.6% | Excellent | Dividend + buyback yield combined |
| Buyback Yield | 11.5% | Good | Active share repurchases |
| Total Capital Returned (TTM) | $5.9B | Good | Dividends + buybacks returned to shareholders |
Sector Rankings
| Metric | Value | Percentile | vs Median |
|---|---|---|---|
| Return on Invested Capital (ROIC) | 4.2% | Bottom 50% | 0.5x below |
| Free Cash Flow Margin | 1.5% | Bottom 50% | 0.6x below |
| Gross Margin | 23.2% | Bottom 25% | 0.6x below |
| Operating Margin | 1.1% | Bottom 50% | 0.2x below |
| Return on Equity (ROE) | 8.5% | Bottom 50% | 0.8x below |
| P/E Ratio | 59.0x | N/A | - |
Financial Scorecard
| Metric | KR | Rating | Sector Context |
|---|---|---|---|
| Return on Invested Capital (ROIC) | 4.2% | Warning | Bottom 50% of sector (median: 8.4%) |
| Free Cash Flow Margin | 1.5% | Warning | Bottom 50% of sector (median: 2.4%) |
| Gross Margin | 23.2% | Adequate | Bottom 25% of sector (median: 39.1%) |
| Debt to Equity Ratio | 226.5% | Warning | High financial leverage |
| P/E Ratio (Price-to-Earnings) | 59.0x | Warning | High expectations priced in |
| Free Cash Flow Yield | 5.2% | Good | Solid cash yield |
Frequently Asked Questions
Q: What is KROGER CO's Return on Invested Capital (ROIC)?
KROGER CO (KR) has a trailing twelve-month Return on Invested Capital (ROIC) of 4.2%. This compares below the sector median of 8.4%. An ROIC below 8% suggests the company may be destroying shareholder value.
Q: What is KROGER CO's Free Cash Flow Margin?
KROGER CO (KR) has a free cash flow margin of 1.5%, generating $2.3 billion in free cash flow over the trailing twelve months. A thin FCF margin may indicate heavy reinvestment or operational challenges.
Q: Is KROGER CO stock overvalued or undervalued?
KROGER CO (KR) trades at a P/E ratio of 59.0x, which is above the sector median of N/A. The EV/Sales multiple is 0.4x. Free cash flow yield is 5.2%, which is in line with market averages.
Q: Does KROGER CO pay a dividend?
KROGER CO (KR) currently pays a dividend yield of 2.1%. Including share buybacks, the total shareholder yield is 13.6%. This yield is moderate, suggesting a balance between income and growth reinvestment.
Q: How much debt does KROGER CO have?
KROGER CO (KR) has a debt-to-equity ratio of 2.3x with total debt of $16.0 billion. Net debt position is $12.0 billion.
Q: What is KROGER CO's revenue and earnings growth?
KROGER CO (KR) declined revenue by 1.8% year-over-year. Earnings per share decreased by 71.4% compared to the prior year. Revenue decline may indicate market challenges or industry headwinds.
Q: Is KROGER CO buying back stock?
KROGER CO (KR) repurchased $5.0 billion of stock over the trailing twelve months. This represents a buyback yield of 11.5%.
Q: How does KROGER CO compare to competitors in Consumer Discretionary?
Compared to other companies in Consumer Discretionary, KROGER CO (KR) shows: ROIC of 4.2% is below the sector median of 8.4% (Bottom 37%). FCF margin of 1.5% trails the sector median of 2.4% (Bottom 40% of sector). Gross margin at 23.2% is 15.9 percentage points lower than sector peers. These rankings are based on MetricDuck's analysis of all Consumer Discretionary companies with available SEC filings.
Q: What warning signs should I watch for with KROGER CO?
Investors in KROGER CO (KR) should monitor these potential warning signs: 1) FCF margin is thin at 1.5%, leaving limited buffer for economic downturns. 2) ROIC has been declining, potentially signaling deteriorating competitive position. 3) Debt-to-equity of 2.3x is elevated. Regular monitoring of SEC filings and quarterly trends is recommended.
Data Source: Data sourced from 10-Q filed 2025-12-12. TTM metrics as of Q4 2025.
Methodology: Financial metrics calculated from SEC 10-K and 10-Q filings using standardized formulas. Sector comparisons use peer group based on SIC code.
Scope: This analysis covers SEC filing fundamentals — profitability, cash flow, balance sheet, and valuation metrics. For analyst estimates and price targets, consult sell-side research.
This analysis is for informational purposes only and does not constitute investment advice.