Assessing Kroger’s Value After Delivery Expansion and Acquisitions in 2025

• Ever wondered if Kroger’s stock is actually a bargain right now? If you’ve been holding back or just watching from the sidelines, you’re not alone. Many investors are searching for the answer to whether Kroger is undervalued or just riding a wave.
• Kroger’s share price has ticked up 13.0% over the last year, and while it’s pulled back slightly in the past month, it’s still showing an impressive 130.9% return over the last five years.
• Recent headlines have spotlighted Kroger’s strategic focus on expanding its delivery network and the completion of several key acquisitions, fueling speculation about future growth. It is this blend of operational moves and market anticipation that has sparked new interest and volatility in the stock.
• When it comes to valuation, Kroger currently earns a score of 5 out of 6 on our valuation checks, meaning it is undervalued in nearly every way we measure it. In the next section, we will break down these valuation approaches and also explore a method that can reveal even deeper insights into where Kroger’s true value might lie.

Kroger delivered 13.0% returns over the last year. See how this stacks up to the rest of the Consumer Retailing industry.

Approach 1: Kroger Discounted Cash Flow (DCF) Analysis

A Discounted Cash Flow (DCF) model estimates a company's intrinsic value by projecting future cash flows and discounting them to today's value. This approach considers how much cash Kroger is expected to generate and what that is worth right now, accounting for the time value of money.

Currently, Kroger produces $2.21 Billion in Free Cash Flow (FCF) over the last twelve months. Analyst forecasts estimate Kroger's FCF could rise steadily, reaching $2.78 Billion by 2026 and $3.16 Billion by 2030. While analyst input covers only the next five years, projections through 2035 are extrapolated using industry and company trends. This provides a broad view of Kroger’s earning power over the next decade.

According to this DCF model, Kroger’s fair value calculates to $88.11 per share. Compared to the current share price, the model indicates the stock is approximately 23.9% undervalued, offering a significant margin of safety for investors.

Result: UNDERVALUED

Our Discounted Cash Flow (DCF) analysis suggests Kroger is undervalued by 23.9%. Track this in your watchlist or portfolio, or discover 926 more undervalued stocks based on cash flows.

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for Kroger.

Approach 2: Kroger Price vs Earnings (P/E Ratio)

The Price-to-Earnings (P/E) ratio is a common valuation tool for assessing profitable companies like Kroger because it directly relates the company's market price to its per-share earnings. When a company is generating solid profits, the P/E ratio helps investors gauge how cheaply or expensively those earnings are being valued by the market.

It is important to understand that what counts as a “normal” or “fair” P/E ratio can change depending on expectations for growth and risk. Higher growth companies usually command higher P/E ratios, while higher risks tend to lower them. This is why it is useful to compare a company’s P/E with industry averages, peer companies, and broader market expectations to see if a stock is priced within a reasonable range.

Right now, Kroger is trading at a P/E ratio of 16.4x. That is below both the Consumer Retailing industry average of 20.1x and the peer group average of 21.1x, suggesting that Kroger’s shares are more conservatively priced than many of its competitors. Simply Wall St’s proprietary Fair Ratio, which takes into account Kroger’s earnings growth, profit margins, industry, market cap, and risk factors, is set at 22.3x for the company. Unlike plain benchmarks, the Fair Ratio aims to reflect a valuation multiple that fits Kroger’s unique profile.

Comparing Kroger’s actual P/E of 16.4x to its Fair Ratio of 22.3x reveals that the stock appears to be undervalued at current levels, which may be an important consideration for investors looking at value relative to growth and risk factors.

Result: UNDERVALUED

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Upgrade Your Decision Making: Choose your Kroger Narrative

Earlier we mentioned that there is an even better way to understand valuation. Let’s introduce you to Narratives. A Narrative is a simple, accessible way for investors to add their own perspective to a company's story, linking their assumptions about Kroger's future revenue, earnings, and margins to a financial forecast and, ultimately, a fair value per share. Narratives connect the dots between what you believe about Kroger and the numbers, making it easier to see how your view translates into an investment decision.

On Simply Wall St’s Community page, millions of users create and update Narratives in real time as new information emerges, whether it is news, earnings reports, or changing market dynamics. Comparing your Narrative’s resulting Fair Value to the current market price can help you decide whether now is the right time to buy or sell, based on your unique view. For Kroger, one investor might see rapid e-commerce growth and health trends justifying a fair value as high as $85.00, while another may worry about competitive pressures and rising costs, seeing fair value as low as $63.00. With Narratives, your investment outlook becomes clearer, smarter, and more dynamic.

Do you think there's more to the story for Kroger? Head over to our Community to see what others are saying!

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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