Investment Thesis
Kroger demonstrates stable cash generation with $1.7B free cash flow, but faces structural profitability challenges with a net margin of only 0.1% and operating margin of 0.6% in a highly competitive grocery sector. Revenue headwinds (-1.9% YoY) and significant leverage (2.27x debt-to-equity) limit upside potential despite positive EPS growth from share buybacks.
KR Strengths
- Solid free cash flow generation of $1.7B supports shareholder returns and debt service
- Operating cash flow of $4.7B demonstrates ability to convert sales into cash despite thin margins
- Reasonable interest coverage ratio of 3.1x indicates manageable debt servicing capacity
- EPS growth of 24% YoY driven by operational improvements and capital allocation discipline
KR Risks
- Extremely thin net margin of 0.1% provides minimal buffer for operational disruptions or competitive pricing pressure
- Revenue decline of 1.9% YoY signals market share losses or volume weakness in core grocery business
- High leverage with 2.27x debt-to-equity ratio and $16B long-term debt limits financial flexibility
- Low current ratio of 0.88x and quick ratio of 0.59x indicate tight near-term liquidity relative to current obligations
- Anemic returns with ROE of 2.2% and ROA of 0.3% suggest inefficient capital deployment
Key Metrics to Watch
- Comparable store sales growth and market share trends
- Operating margin expansion initiatives and cost management
- Debt reduction progress and leverage ratio improvement
- Free cash flow sustainability and working capital trends
- Revenue stabilization and same-store sales performance
KR Financial Metrics
KR Profitability Ratios
KR Balance Sheet & Liquidity
KR 5-Year Financial Trend
5-Year Trend Summary: KROGER CO's revenue has grown significantly by 13% over the 5-year period, indicating strong business expansion. The most recent EPS of $3.06 reflects profitable operations.
KR Growth Metrics (YoY)
KR Quarterly Performance
| Quarter | Revenue | Net Income | EPS |
|---|---|---|---|
| Q3 2025 | $33.6B | $155.0M | $0.23 |
| Q2 2025 | $33.9B | $466.0M | $0.64 |
| Q1 2025 | $45.1B | $866.0M | $1.29 |
| Q3 2024 | $33.6B | $618.0M | $0.84 |
| Q2 2024 | $33.9B | -$180.0M | $-0.25 |
| Q1 2024 | $45.2B | $947.0M | $1.29 |
| Q3 2023 | $34.0B | $398.0M | $0.55 |
| Q2 2023 | $33.9B | -$180.0M | $-0.25 |
Data sourced from SEC EDGAR 10-Q quarterly filings. Figures may represent quarterly or cumulative values.
KR Capital Allocation
KR SEC Filings
Access official SEC EDGAR filings for KROGER CO (CIK: 0000056873)