Value
7.7/10data confidence 100%| Component | Sub-score |
|---|---|
| P/E | 3.8 |
| P/S | 10.0 |
| EV/EBITDA | 6.8 |
| Fwd P/E | 9.2 |
| PEG | 9.6 |
| Analyst target | 6.0 |
- ▸Forward P/E: 10.5x
- ▸PEG: 0.57
- ▸Attractively valued
KR · Why this verdict
Why Kroger Company (The) (KR) is rated SELL
Updated
Model-generated analysis — not investment advice. Not a registered investment advisor. Past performance does not guarantee future results.
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VerdictSELL
Overall score5.0/10
ConfidenceMEDIUM
MacroNEUTRAL
TrendMatrix Research · core thesis
Engine thesis — one sentence
Kroger offers a forward earnings multiple of 11.4x, exceptional free cash flow generation at 335% of net income, and a flawless four-quarter earnings beat streak, but confirmed negative price momentum with the stock below its 200-day moving average and quality metrics just short of the minimum threshold argue for waiting on a more constructive technical backdrop before building a position.
Falsifiable statement — pillar-level invalidators below. Engine-derived; not personalized advice.
Thesis pillars
| Pillar | Expectation | Trend |
|---|---|---|
Free cash flow runs at approximately 335% of net income, indicating that reported earnings substantially understate the business's cash-generation capacity — a quality characteristic that provides meaningful cushion against cyclical earnings pressure. Quality | Free cash flow conversion stays above 200% of net income for 2 consecutive quarters, confirming the exceptional cash generation is not a one-time occurrence. | →Stable |
| CounterGross margins are structurally thin for the grocery format, so any meaningful input-cost or competitive pricing pressure could compress free cash flow faster than reported earnings would indicate. | ||
The company has beaten earnings estimates in each of the four most recently reported quarters, averaging approximately 3.7% above consensus; that track record of consistently under-promising and over-delivering reflects disciplined management of market expectations. Catalyst | The earnings beat streak extends to 6 consecutive quarters with an average positive surprise of at least 2%, confirming execution discipline is durable. | →Stable |
| CounterEarnings are due in 2 days; a single miss at this upcoming report would immediately end the streak and force a reassessment of the guidance credibility thesis that underpins the recent positive sentiment. | ||
At a forward P/E of 11.4x and a PEG ratio of 0.62, the stock screens attractively valued relative to the earnings growth trajectory, leaving room for multiple expansion even without a meaningful acceleration in fundamentals. Value | Forward P/E expands toward 14x over 12 months as the market re-rates the consistent earnings delivery. | →Stable |
| CounterThin gross margins and the absence of a clearly identifiable competitive moat may justify a structurally compressed multiple — the valuation discount may reflect the market's accurate read on long-term return potential rather than a mispricing opportunity. | ||
The stock is trading below its 200-day moving average with the moving average slope declining at approximately 1.1% per month — a confirmed downtrend that typically requires a sustained reversal in price and trend before new capital should be committed. Momentum | Price closes above the 200-day moving average for 4 consecutive weeks with the moving average slope flattening or turning positive, confirming the downtrend has ended. | →Stable |
| CounterThe momentum score just clears the minimum threshold and earnings quality is strong; if the upcoming earnings report beats estimates, the stock may recover above its moving average quickly, making the downtrend a temporary rather than structural condition. | ||
Free cash flow runs at approximately 335% of net income, indicating that reported earnings substantially understate the business's cash-generation capacity — a quality characteristic that provides meaningful cushion against cyclical earnings pressure.
→StableQuality
- Expectation
- Free cash flow conversion stays above 200% of net income for 2 consecutive quarters, confirming the exceptional cash generation is not a one-time occurrence.
CounterGross margins are structurally thin for the grocery format, so any meaningful input-cost or competitive pricing pressure could compress free cash flow faster than reported earnings would indicate.
The company has beaten earnings estimates in each of the four most recently reported quarters, averaging approximately 3.7% above consensus; that track record of consistently under-promising and over-delivering reflects disciplined management of market expectations.
→StableCatalyst
- Expectation
- The earnings beat streak extends to 6 consecutive quarters with an average positive surprise of at least 2%, confirming execution discipline is durable.
CounterEarnings are due in 2 days; a single miss at this upcoming report would immediately end the streak and force a reassessment of the guidance credibility thesis that underpins the recent positive sentiment.
At a forward P/E of 11.4x and a PEG ratio of 0.62, the stock screens attractively valued relative to the earnings growth trajectory, leaving room for multiple expansion even without a meaningful acceleration in fundamentals.
→StableValue
- Expectation
- Forward P/E expands toward 14x over 12 months as the market re-rates the consistent earnings delivery.
CounterThin gross margins and the absence of a clearly identifiable competitive moat may justify a structurally compressed multiple — the valuation discount may reflect the market's accurate read on long-term return potential rather than a mispricing opportunity.
The stock is trading below its 200-day moving average with the moving average slope declining at approximately 1.1% per month — a confirmed downtrend that typically requires a sustained reversal in price and trend before new capital should be committed.
→StableMomentum
- Expectation
- Price closes above the 200-day moving average for 4 consecutive weeks with the moving average slope flattening or turning positive, confirming the downtrend has ended.
CounterThe momentum score just clears the minimum threshold and earnings quality is strong; if the upcoming earnings report beats estimates, the stock may recover above its moving average quickly, making the downtrend a temporary rather than structural condition.
Per-dimension breakdown
Quality
3.9/10data confidence 100%| Component | Sub-score |
|---|---|
| ROE | 4.6 |
| ROA | 3.8 |
| Gross margin | 0.8 |
| Op margin | 1.3 |
| Net margin | 0.4 |
| Current ratio | 3.2 |
| FCF quality | 10.0 |
| Moat | 4.2 |
| Piotroski F | 6.7 |
- ▸Excellent cash conversion: 287% FCF/NI
- ▸No competitive moat
Growth
3.8/10data confidence 67%| Component | Sub-score |
|---|---|
| Rev growth | 3.0 |
| EPS growth | 4.6 |
Momentum
2.9/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 3.5 |
| MACD | 0.0 |
| OBV | 10.0 |
| MA position | 1.0 |
| Volume | 0.0 |
- ▸Volume accumulation (rising OBV)
- ▸Below 200-MA, MA slope -1.3%/30d — confirmed downtrend
Sentiment
6.9/10data confidence 100%| Component | Sub-score |
|---|---|
| LLM sentiment | 5.5 |
| Analyst rating | 7.5 |
| Price target | 7.8 |
- ▸Analyst upside: 21%
Insider
5.0/10data confidence 50%| Component | Sub-score |
|---|---|
| materiality | 5.0 |
| holder change | 5.1 |
- ▸No net insider activity — $0 (0.000% of mkt cap)
Peer rank
3.2/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 4.0 |
| quality rank | 4.0 |
| growth rank | 0.0 |
Technical
6.7/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 7.8 |
| support resistance | 7.1 |
| 52w position | 5.3 |
Risk (lower is worse)
4.7/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 7.4 |
| days to cover | 5.1 |
| volatility | 4.0 |
| put call | 1.1 |
| implied vol | 5.9 |
| max pain risk | 3.0 |
| beta | 10.0 |
| debt equity | 1.3 |
- ▸Elevated put/call: 1.83
- ▸Above max pain $40
Catalyst
5.6/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 5.0 |
| earnings history | 6.7 |
| earnings timing | 5.0 |
| surprise avg | 3.9 |
| dividend safety | 5.2 |
| news activity | 8.0 |
- ▸Strong earnings: 3B/1M
- ▸Dividend: 239.0%
How the verdict was assembled
Engine trigger
Quality below minimum threshold.
Engine technical detail
verdict_path:
L1:HARD_BLOCKPassed (4)
- INSIDER:OK
- EARNINGS_PROXIMITY:77d clear
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (3)
- MOMENTUM:2.9<4.5
- ASYMMETRY:1.3<1.5@spot
- DEATH_CROSS:HARD_BLOCK
Warning (1)
- 8K_CSUITE_CHANGE:5.02 (officer departure/appointment)
Reward-to-Risk
1.32
Upside
+8.9%
Downside
6.8%
Sizing output
AVOID
SetupFALLING_KNIFE — Death cross, below all MAs, RSI 38, MACD bearish
EdgeNO_EDGE — No clear edge identified
SuitabilityMODERATE — Balanced profile
Investment implication
The L1 gate blocked the positive-verdict path: a hard-floor threshold was breached, so dimensional pillars — including Value at 7.7 could not lift the engine output above the verdict floor. Failed gate signal: MOMENTUM:2.9<4.5.
The strongest dimensions are Value at 7.7, Sentiment at 6.9, and Technical at 6.7; the weakest are Momentum at 2.9, Peer rank at 3.2, and Growth at 3.8. The V9 engine flagged 3 failed gates with 1 warning, producing an asymmetric reward-to-risk of 1.32 and an engine sizing output of AVOID.
What would invalidate the thesis
Falsifying conditions — when triggered, the corresponding pillar's thesis is invalidated.
- P1The company has beaten earnings estimates in each of the four most recently reported quarters, averaging approximately 3.7% above consensus; that track record of consistently under-promising and over-delivering reflects disciplined management of market expectations.
Trip ifEPS surprise falls below 0% for 1 quarter, ending the perfect beat streak.
- P2Free cash flow runs at approximately 335% of net income, indicating that reported earnings substantially understate the business's cash-generation capacity — a quality characteristic that provides meaningful cushion against cyclical earnings pressure.
Trip ifFree cash flow conversion falls below 150% of net income for 2 consecutive quarters.
- P3At a forward P/E of 11.4x and a PEG ratio of 0.62, the stock screens attractively valued relative to the earnings growth trajectory, leaving room for multiple expansion even without a meaningful acceleration in fundamentals.
Trip ifForward P/E expands above 16x for 2 consecutive quarters, indicating the valuation discount has been captured.
- P4The stock is trading below its 200-day moving average with the moving average slope declining at approximately 1.1% per month — a confirmed downtrend that typically requires a sustained reversal in price and trend before new capital should be committed.
Trip ifPrice closes above the 200-day moving average for 4 consecutive weeks.