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RISK CONCERN
Investment Strategy, Risk Analysis, and Insights by Chartered Professionals
The Kroger Co. (XNYS:KR) In-Depth Stock/Fundamental/Options Analysis Today
Primary Facts
KR
Name:
THE KROGER CO. (XNYS:KR)
Sector:
1.44B
Industry:
Grocery Stores
CEO:
Mr. William McMullen
Total Employees:
420,000
Our Technological Advancement Rating
Our Rating:
D
Technological advancement compared to industry is -56.84% lower
ANALYSIS OF ALL CRITICAL FACTORS & RISKS RELATED TO THE STOCK & FUNDAMENTAL/LONG-TERM ANALYSIS OF THE KROGER CO.(KR) AS PER DATA ANALYSIS OF LAST 3 YEARS AND COMPARISON WITH COMPETITORS/PEERS, AND GROCERY STORES INDUSTRY.
Primary Targets/Price Insights
Previous Close ($) :
48.43
One Month Price Target:
$48.56
Six Month Price Target :
$49.2
Likely Price in One Year's Time:
Ticker:
$49.96
Likely Trading Range Today Under (Normal Volatility)
$48.312
Price Upper limit ($) :
$48.64
Price Lower limit ($) :
Crash Risk Prep/Key Price Levels (High Volatility/Risk)
Price, as per data analysis, isn't likely to fall below:
Today:
$46.47
This week:
$44.05
This month :
$39.66
Other Primary facts
Market Cap:
34.72B
Market Cap Classification:
Large Cap
Number of Shares
IPO Date:
715.56M
Best/Worst Daily Performance (Last 3+ Years)
Highest Daily Appreciation:
11.61%
-8.7%
Worst Daily Decline:
Our Options Trading Entry Points
Iron Condor entry points for options expiring in 1 week's time
Low risk (<2%) entry points
Buy Call:
Sell Call:
Buy Put:
Sell Put:
$57.52
$53.28
$39.34
$43.58
Medium risk (<10%) entry points
Buy Call
Sell Call
$51.90
Buy Put:
Sell Put:
$50.99
$44.95
$45.87
These entry points can be used for other strategies, such as butterflies, straddles, etc.
Risk-Adjusted returns (Sharpe Ratio) of
KR
Sharpe Ratio:
4.51%
Comparison:
KR, is amongst the top 20% stocks with highest risk-adjusted returns
Sharpe ratio is 18.54% higher than the industry
& ratio is 98.07% higher than the market/S&P 500 average
Average Returns/Yield of
KR
Daily returns:
0.10%
Weekly returns:
0.50%
Monthly returns:
2.00%
Yearly returns:
23.09%
Comparison of returns:
Average annual return/yield (last 3 years) is 4.00% above industry average
Classification:
KR, is amongst the top 40% highest yielding stocks in terms of daily returns
Results of T-Test of Returns:
0.53
Statistical test of Returns:
KR has yielded returns statistically similar to the market
Volatility (measured by Standard Deviation)
Daily Volatility:
2.02%
Weekly Volatility:
4.52%
Monthly Volatility:
9.03%
Yearly Volatility:
31.29%
Volitlilty of last five days (Measured by Standard Deviation)
Average Volatility of this Week:
1.36%
Volatility in last five trading days has been -32.59% below long-term volatility
Value at Risk Analysis (VaR)
Daily VaR:
-4.05%
Weekly VaR:
-9.05%
Monthly VaR:
-18.11%
How Much Can the price of
KR
Decline in a Recession?
Likely price decline in a recession:
Base case (decline):
-15%
Worst case (decline):
-62.72%
This translates to price declining to:
$41.23
This translates to price declining to:
$18.05
Severe Crash Probability
Risk of crash in next 6/12 months: Very high (>70%)
What is Value at Risk (VaR)?
Risk Fundamentals
KR is a 27.79% riskier investment compared to the market/S&P 500 & is 9.48% riskier than Nasdaq (IXIC)
Risk (measured by volatility) is -15.89% below industry average
Overall, it is amongst the top 50% most risky stocks
Beta Examination of
KR
Beta in relation to market/S&P 500--0.47
Expected beta in 1 year's time:
0.616
Expected beta in 3 year's time:
0.871
Unlevered (debt free) Beta:
0.174
Beta in relation to Nasdaq (XNAS):
0.156
Beta in relation to all global stocks::
0.214
Beta Comparison & Analysis
Beta of competitors/peers::
0.574
Beta is -17.90% lower than peers
Average Industry Beta:
0.55
Beta is -14.24% below industry average
Sustainable Growth Rate Analysis
Sustainable growth rate for this stock/firm:
6.75%
Sustainable growth rate is -66.25% below industry average
Alpha provided | Alpha Analysis
Alpha provided:
0.176
Alpha is 9.02% above industry average alpha yield
Alpha is 1122% higher than market/& is unsustainably high
Analysis of Cost of Capital of
KR
Equity cost of capital:
0.064
Equity cost of capital is -7.75% below industry mean WACC
Unlevered (without debt) cost of capital:
2.35%
Before-tax cost of debt:
2.75%
After-tax cost of debt:
2.17%
Overall debt rating:
High AA grade (second highest grade)
Weighted average cost of capital (WACC):
2.17%
WACC is 1.98% above industry mean WACC
Key Per-Share Metrics & Analysis
Revenue per share:
$197.31
Revenue growth rate per share of (3Y):
3.75
-
EPS:
$2.90
Expected Annual growth rate of EPS (3Y):
-17.04%
Expected future EPS growth rate is -210.77% lower than the Grocery Stores industry
Free cash flow (FCF) per share:
$3.40
-
-
Debt per share
$27.05
EBITDA per share
$9.12
Valuation Analysis Today of
KR
P/E Ratio:
16.77
P/E Ratio of Competitors/Peers:
18.33
P/E ratio is -8.51% lower than main peers & is -16.95% lower than the industry
Stock price/value with industry average P/E ratio: $58.57
KR is -17.32% undervalued if valued using industry average P/E ratio
Share value as per dividend discount (DDM) model: $55.51
Present value of the expected future dividends only: $24.98
P/S (Price to Sales ratio):
0.25
Price to sales ratio is -57.51% below the industry mean
P/B (Price to book value ratio):
3.75
Price to free cash flow: 14.24
Price to free cash flow ratio is -22.39% lower than the industry
Net income growth rate (3Y):
-
Dividend Analysis
Dividend payout rate: 6.33%
Dividend yeild: 1.73%
Previous Dividend: $0.21
Previous adjusted dividend: $0.21
Previous Dividend: $0.84
Expected next dividend best case: $0.23
Expected next dividend worst case: $0.19
Average dividend payment (long-term): $0.19
Average dividend increase/decrease (growth rate) % per period: 2.92%
Expected next dividend payment date: 30/08/2022
Expected next dividend record date: 08/11/2022
Expected next dividend declaration date: 06/08/2022
Previous dividend payment date: 06/01/2022
Previous dividend record date: 13/05/2022
Previous dividend declaration date: 03/10/2022
Dividend History:
2022-05-12--$0.21
2021-11-12--$0.21
2021-05-13--$0.18
2022-02-14--$0.21
2021-08-12--$0.21
2021-02-11--$0.18
Dividend growth rate is -117.12% lower than the industry average
In-depth Debt & Leverage Analysis
Debt to equity ratio:
209.76%
Net debt to equity ratio:
204.18%
Debt to assets ratio:
39.66%
Net debt to assets ratio:
38.61%
Debt-to-asset ratio is -42.95% below industry average
Ability to repay debt:
Interest coverage ratio:
11.21
Interest coverage ratio is 19.75% more than industry average
Looking forward:
Debt growth rate:
0.00%
-
Debt repayment rate in last quarter: 1.67%
Analysis of Key Statistics
Correlation of price movement with the market:
0.187
Statistical significance of correlation:
KR has a statistically significant correlation with the market
Average Correlation of the industry with the market:
0.311
Stock price is -39.98% less correlated with the market compared to the industry average correlation
R Squared (percentage of price movement explained by movement of the market):
0.311
Correlation of price movement with Nasdaq (^IXIC):
0.031
Covariance of price movement with the market:
0.037
Kurtosis
4.765
Returns have moderate fat-tails (leptokurtic), i.e., returns considerably higher or lower than the mean returns are more probable, compared to assets with normally distributed returns
Skewness of returns:
0.268
Returns are, approximately, symmetrical
Fundamental Analysis & Dupont Analysis of
KR
Gross Profit Margin Ratio:
87%
Operating Profit Margin Ratio:
2.96%
Operating profit margin is 62.55% higher than the industry
Net Profit Margin Ratio:
87%
Effective Tax Rate:
18.44%
Effective tax rate is -2.94% lower than the industry
Dupont Method
Net Profit Margin
Return on Equity Ratio (ROE):
×
ROA
=
×
23.61%
Return on equity (ROE) is 21.43% higher than the industry
Financial Leverage
Asset Turnover Ratio (ROA):
4.46%
Return on assets (ROA) is -3.28% lower than the industry
Financial Leverage:
1.7x
Current Ratio:
0.82
Current ratio is -34.73% below industry average
Cash Conversion Cycle (days):
-14.5
Cash conversion cycle is -134.54% below industry average
The remaining useful life of property plant & equipment is: 2.6 years
Stock based compensation to net income ratio:
2.57%
In-depth Efficiency Analysis
Revenue generated per employee:
336.2K
Each employee generates -21% less revenue than industry average revenue per employee
EBITDA generated per employee:
15.5K
Each employee generates -83% less EBITDA than industry average revenue per employee
Profit generated per employee:
5.2K
Each employee generates -64% less net income/profit than industry average revenue per employee
Free cash flow (FCF) generated per employee:
3.4K
Each employee generates -44% less free cash flow than industry average revenue per employee
Assets/Capital per employee
86.3K
Each employee generates -44% less free cash flow than industry average revenue per employee
Research & Development (R&D) Analysis
-
-
Competitors/Peer firms of
KR
TYSON FOODS, INC. (XNYS:TSN)
BROWN-FORMAN CORPORATION (XNYS:BF.B)
BF SpA (XLON:0RQY)
THE HERSHEY COMPANY (XNYS:HSY)
Ambev SA (XNYS:ABEV)
SYSCO CORPORATION (XNYS:SYY)
GENERAL MILLS, INC. (XNYS:GIS)
Mexican Economic Development, Inc. (XNYS:FMX)
HORMEL FOODS CORPORATION (XNYS:HRL)
Current Analyst Ratings
Strong buy�25%
Buy�13%
Hold�58%
Sell�4%
Strong sell�4%
Overall analyst sentiment is: Hold
Income Statement
Period:
TTM
Date:
5/21/22
Revenue:
141.19B
Cost of Revenue:
Gross Profit:
R&D Expense
General & Admin Expenses:
Selling, General & Admin Expenses
Sales and Marketing Expenses
Other Expenses :
Operating Expenses :
Cost & Expenses :
Interest Income:
Interest Expenses:
Depreciation & Amortization:
EBITDA:
Operating Income:
Other Income Expenses:
Income Before Tax:
Income Tax Expense:
Net Income:
Balance Sheet
Date:
Calendar Year:
Period:
Cash & Cash Equivalents:
Short Term Investments:
Cash & Short Term Investments:
Net Receivables:
Inventory:
Other Current Assets:
Total Current Assets:
PP&E:
Goodwill:
Intangible Assets:
Long Term Investments:
Tax Assets:
Other Non-Current Assets:
Total Non-Current Assets:
Other Assets:
Total Assets:
Accounts Payable:
Short Term Debt:
Tax Payables:
Deferred Revenue:
Other Current Liabilities:
Total Current Liabilities:
Long Term Debt:
Other Non-Current Liabilities:
Total Non Current Liabilities:
Other Liabilities:
Total Liabilities:
Common Stock:
Retained Earnings:
Accumulated Other Comprehensive Loss:
Other Total Stockholders' Equity:
Total Stockholders' Equity:
Total Liabilities and Stockholders' Equity:
Total Investments:
Total Debt:
Net Debt:
110.54B
30.65B
-
23.36B
23.36B
-
1.96B
25.32B
-
582.00M
3.27B
6.52B
4.18B
2.18B
2.68B
495.00M
2.18B
Statement of Cash Flow
Date:
Period:
1.05B
Differed Income Tax :
- 2000.00K
Stock Based Compensation :
56.00M
Change in Working Capital :
396.00M
Accounts Receivables:
-
Other Working Capital:
145.00M
Other Non-Cash Items:
614.00M
Net Cash Provided by Operating Activities:
2.26B
Investments in PP&E:
- 820000.00K
Net Acquisitions:
-
Purchases of Investments:
-
Sales/Maturities of Investments:
Other Investing Activities:
Net Cash Used for Investing Activities:
Debt Repayment:
Common Stock Issued:
Common Stock Repurchased:
Dividend Paid:
Other Financing Activities:
Net Cash Used Provided by Financing Activities:
Effect of FOREX on Changes in Cash:
Net Changes in Cash:
Cash at End of Period:
Cash at Beginning of Period:
Operating Cash Flow:
Capital Expenditure:
Free Cash Flow (FCF):
5/22/21
2022
Q1
2.31B
1.01B
3.32B
1.94B
6.77B
522.00M
12.55B
29.72B
3.08B
978.00M
-
-
2.49B
36.27B
-
48.81B
7.02B
1.79B
-
-
6.40B
15.21B
19.36B
3.47B
24.37B
-
39.58B
-
-
- 627000.0K
-
May 22, 2021 at 6:00:00 AM
135.87B
9.23B
48.81B
-
21.15B
18.8B
-
- 33000.00K
- 853000.00K
- 328000.00K
31.00M
- 402000.00K
- 138000.00K
56.00M
- 781000.00K
-
622.00M
2.31B
1.69B
2.26B
- 820000.00K
1.44B
Our Proprietary Portfolio Rating
Our Rating:
B
Price Forecast/Expected Price in Next 5 Years of
KR
2023
2024
2025
2026
2027
$52.34
$54.00
$55.71
$57.48
$59.30