One of the oldest retail establishments in America, Kroger (NYSE: KR) is by no means too dated to be a top contender in the market today. Managing more than 2000 retail grocery outlets as well as hundreds of other businesses, ranging from fuel centers, pharmacies, and even full medical clinics, Krogers has positioned itself well in this current day and age of multi-concept retail stores.
In this edition of Deal, No Deal, we will look at how Kroger manages its business, if its price is indicative of any past successes or failures, as well as what the future holds for a household grocery chain like it.
Quantitative Analysis: Looking Up and Up
The good news for retail fans is that Kroger’s stock has been on the rise since the start of the year, coming in at about 36.47% up at $61.67 (April 10, 2022). Long-term growth is even more impressive, with a 52-week return of 62.42% and a 5-year return of 105.9%. With a market beta of 0.46, Kroger remains relatively less volatile with each movement of the stock market index.
Though their current P/E ratio stands at 26.57, higher than the market average currently, which may indicate high investor interest over the short term. Expect some sell-off once the market cools but projected cash flows are expected to be strong given the current situation and market that Kroger operates in.
Qualitative Analysis: Better Ratings for Better Prices
Kroger’s rating as a grocery chain has recently been given a bump by Bank of America, boosting its price rating from a previous ceiling of $62 per share to $71 per share. A large driver of this price increase is actually the inflation that is currently happening in the market as a whole. While this usually causes some retailers to lower their valuation due to higher input costs, it seems that Kroger is able to pass on these price increases to its customers, effectively maintaining their revenue levels despite increases in costs.
With good financial performance as well as a good outlook from one of the leading financial bodies in the country, Kroger seems poised for a definite deal in your next stock purchase. Just keep in mind that any stock price valuation this high has a tendency to have sell-offs here and there, especially closer to the new $71 target that Bank of America had just set.
Note: Please do not invest money or assets in the financial markets that you cannot afford to lose. This article should not be construed to be investment advice and is for information purposes only