Stock Analysis: Kroger

By Fredrik Arnold

Tuesday, December 6, 2022 9:25 PM EDT

Image Source: Pixabay

The Kroger Co bears the ticker symbol KR, and this is my first mention of Kroger for my new Viking Portfolio. However, I have previously selected KR for one of my previous seven Dog of The Week Portfolios.

Kroger is the leading American grocer, with 2,726 supermarkets operating under several banners throughout the country as of the end of fiscal 2021.

Around 83% of stores have pharmacies, while nearly 60% also sell fuel. The company also operates roughly 120 fine jewelry stores.

Kroger features a leading private-label and self-manufactures around 30% of its own-brand units (and more than 40% of its grocery own-label assortment) in 33 food production plants nationwide.

Kroger is a top-two grocer in most of its major markets (as of early 2021, according to company data). Virtually all of Kroger's sales come from the United States.

The Kroger Co. was founded in 1883 and is based in Cincinnati, Ohio.

Three key data points gauge

The Kroger Co:

(1) Price

(2) Dividends

(3) Returns

Those three basic keys best tell whether any company has made, is making, and will make money.

KR Price

Kroger’s price per share was $46.33 at Tuesday’s market close. And, in the past year, KR’s share price rose by $1.11 or about 2.5%.

If Kroger’s stock trades in the range of $32.00 to $55.00 this next year, its recent $46.33 share price might reach $50.00 by next year. My upside increase estimate of $3.67 is $3.92 under the median one-year price target estimates from eighteen analysts.

KR Dividends

Kroger’s most recently declared quarterly dividend of $0.26 per share, equals $1.04 annually and casts an annual yield of 2.24%.

KR Returns

Adding the $1.04 annual estimated KR dividend to my one-year price upside estimate of $3.67 reveals a $4.71 potential gross gain per share.

At Tuesday’s $46.33 closing price, a little over $1000 would buy 22 shares.

A $10 broker fee (if charged), paid half at purchase and half at sale, might cost us about $0.45 per share.

Subtract that maybe $0.45 brokerage cost from my estimated $4.71 gross gain makes a net gain of $4.26 X22 shares = $93.72 for a 9.2% net gain including a 2.24% annual dividend yield.

In one year our $1K investment in shares of The Kroger Co would generate $22.40 in cash dividends. Of course, a single share of KR stock at Tuesday's $46.33 price is over 2 times more than the annual dividend income from our $1000.00 investment.

So, by my dogcatcher ideal, this is NOT the time to buy Kroger’s shares based on their dividends for the coming year 2023. The current dividend from $1K invested is 2.07 times less than Kroger’s single share price. Consider yourself alerted. Wait for The Kroger Co share price to fall to $32.25 before you buy.

All of the estimates above are speculation based on the past history of The Kroger Co. Only time and money invested in this stock will determine its market value.

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Disclaimer: This article is for informational and educational purposes only and should not be construed to constitute investment advice. Nothing contained herein shall constitute a ...

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