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The Kroger

KR
29
Grocery Stores · Consumer Defensive
Price
$58.82
+0.21 (+0.36%)
Market Cap
$36.04B
Winston Score
29
Winston is worried
Below-average fundamentals — multiple weak pillars.

Share count falling — buybacks

13.1% over 4y

The company has reduced its share count over this period, returning value to shareholders through buybacks.

Diluted shares outstanding: 754.0M (2022) → 655.0M (2026)

Kroger is one of the largest grocery store chains in the United States. It operates over 2,700 supermarkets under names like Kroger, Fred Meyer, Ralphs, and Harris Teeter, selling food, household products, pharmacy items, and fuel to everyday shoppers. It is the largest traditional supermarket operator in the country by sales.

Kroger makes money primarily by selling groceries and goods in its stores, but it also earns revenue from its pharmacy business, fuel centers, and a growing advertising business that sells space to brands wanting to reach its shoppers. It operates almost entirely in the U.S., generating roughly $150 billion in annual sales. Its main competitive advantages are its private-label brands and its loyalty program, which gives it data on millions of customers. The biggest risk Kroger faces is intense competition from Walmart, Costco, and Amazon, all of which are aggressively expanding in grocery and can undercut prices.

Winston Score History

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23 trades / 12mo

11 Congressional buys and 12 sells on KR in the last 12 months.

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Score breakdown

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Quality

Gross Margin
21.3%
Thin — 21.3% gross margin
Operating Margin
3.6%
Thin — 3.6% operating margin
ROCE
5.2%
Weak — 5.2% return on capital

ROIC between 5% and 15%. They earn 5 to 15 cents back per year on every dollar invested.

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Growth

Sales YoY
-8.6%
Shrinking sales (-8.6% YoY)
EPS YoY
-69.3%
Earnings shrinking (-69.3% YoY)

Earnings per share down more than 10%. Either a bad year, or a real decline.

EPS Consistency
4/8 quarters
Earnings inconsistent quarter-to-quarter

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Cash Flow

Cash Conversion
847%
Turns 847% of profit into real cash
FCF Margin
2.2%
Thin free cash flow (2.2%)

FCF margin between 0% and 10%. Some cash from sales, but not a lot.

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Stability

Debt / Equity
3.07
Heavy debt load (3.07)
Interest Cover
6.43x
Adequate interest coverage (6.4x)

Interest coverage between 3 and 8. Profits cover interest several times over.

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Valuation

P/E Ratio (TTM)
50.3x
Expensive — P/E 50.3

P/E over 35. The market is pricing in heavy, sustained growth.

P/E vs Forward
+40.5
GROWING
Earnings expected to grow meaningfully — cheaper on forward P/E (50.3 → 9.7)

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Dividends

Dividend Yield
2.44%
Moderate income — 2.44% yield

Standard yield zone for stable dividend payers. A meaningful piece of total return.

Dividend Growth
+9.9%
Dividend growing modestly (9.9% YoY)

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