Should Value Investors Buy Kroger (KR) Stock?

Here at Zacks, our focus is on the proven Zacks Rank system, which emphasizes earnings estimates and estimate revisions to find great stocks. Nevertheless, we are always paying attention to the latest value, growth, and momentum trends to underscore strong picks.

Of these, perhaps no stock market trend is more popular than value investing, which is a strategy that has proven to be successful in all sorts of market environments. Value investors use fundamental analysis and traditional valuation metrics to find stocks that they believe are being undervalued by the market at large.

Zacks has developed the innovative Style Scores system to highlight stocks with specific traits. For example, value investors will be interested in stocks with great grades in the "Value" category. When paired with a high Zacks Rank, "A" grades in the Value category are among the strongest value stocks on the market today.

One stock to keep an eye on is Kroger (KR). KR is currently holding a Zacks Rank of #2 (Buy) and a Value grade of A. The stock has a Forward P/E ratio of 13.58. This compares to its industry's average Forward P/E of 22.28. Over the past year, KR's Forward P/E has been as high as 14.46 and as low as 9.24, with a median of 11.72.

KR is also sporting a PEG ratio of 2.79. This figure is similar to the commonly-used P/E ratio, with the PEG ratio also factoring in a company's expected earnings growth rate. KR's PEG compares to its industry's average PEG of 4.24. Over the past 52 weeks, KR's PEG has been as high as 2.80 and as low as 1.34, with a median of 1.85.

We should also highlight that KR has a P/B ratio of 3.04. The P/B ratio is used to compare a stock's market value with its book value, which is defined as total assets minus total liabilities. This stock's P/B looks solid versus its industry's average P/B of 3.64. Over the past year, KR's P/B has been as high as 3.19 and as low as 1.95, with a median of 2.46.

Finally, investors should note that KR has a P/CF ratio of 5.45. This figure highlights a company's operating cash flow and can be used to find firms that are undervalued when considering their impressive cash outlook. This stock's P/CF looks attractive against its industry's average P/CF of 11.67. KR's P/CF has been as high as 5.64 and as low as 3.68, with a median of 4.61, all within the past year.

These are only a few of the key metrics included in Kroger's strong Value grade, but they help show that the stock is likely undervalued right now. When factoring in the strength of its earnings outlook, KR looks like an impressive value stock at the moment.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.