Kroger
KR Large CapConsumer Defensive · Grocery Stores
Updated: May 20, 2026, 22:09 UTC
Key Metrics
Valuation Analysis
About the Company
The Kroger Co. operates as a food and drug retailer in the United States. The company operates combination food and drug stores, multi-department stores, marketplace stores, and price impact warehouses. Its combination food and drug stores offer natural food and organic sections, pharmacies, general merchandise, pet centers, fresh seafood, and organic produce; and its multi-department stores provide apparel, home fashion and furnishings, outdoor living, electronics, automotive products, and toys. The company's marketplace stores offer full-service grocery, pharmacy, health and beauty care, and perishable goods, as well as general merchandise, including apparel, home goods, and toys; and its price impact warehouse stores provide grocery, and health and beauty care items, as well as meat, da
Kroger Stock at a Glance
Kroger (KR) is currently trading at $68.67 with a market capitalization of $42.3B. The trailing P/E ratio stands at 44.59x, with a forward P/E of 12.21x. The 52-week range spans from $58.60 to $76.58; the current price is 10.3% below the yearly high. Year-over-year revenue growth stands at +1.2%. The net profit margin stands at 0.69%.
💰 Dividend
Kroger pays an annual dividend of $1.40 per share, representing a yield of 2.04%. The payout ratio stands at 87.01%. The elevated payout ratio reflects a mature dividend policy.
📊 Analyst Rating
22 analysts rate Kroger (KR) on consensus: Buy. The average price target is $75.55, implying +10.01% from the current price. Analyst price targets range from $61.00 to $86.00.
Investment Thesis: Strengths & Weaknesses
- Analyst consensus: Buy
- Solid dividend yield of 2.04%
- Positive free cash flow
- –Low profitability (0.69% margin)
- –Currently flagged as overvalued
- –High leverage (D/E 415.97)
Technical Snapshot
Price shows short-term weakness (below 50d MA) but is still in a longer-term uptrend (above 200d MA).
Risk Profile
The data points to relatively defensive market behavior, higher leverage relative to equity.
Trading Data
💵 Dividend Info
Related Stocks in the Same Sector
Kroger 2026: Buffett's Grocery Hedge After the Albertsons Deal Collapse
The Real Story
Kroger is Warren Buffett's quietest defensive position — a grocery-retail name Berkshire built into a top-25 holding after the December 2024 FTC-blocked Albertsons merger. Berkshire's 50M-share position ($3.3B) was originally accumulated 2019-2022 as a pure defensive bet. The 2025-2026 acceleration came when Kroger pivoted to a $5B accelerated buyback and a new $7.5B Express Lane-fulfillment partnership with Instacart.
The 2026 story is the post-Albertsons-collapse strategic reset. With the $24.6B merger blocked, Kroger received a $600M termination fee from Albertsons. Free cash flow grew +18% in fiscal 2025 to $3.4B, and management committed to accelerating the buyback from $1B annually to $5B by 2027. Q1/2026 same-store sales (excluding fuel) grew +2.4%, with digital revenue +18% to $13B annualized.
The unappreciated leg is the Kroger Precision Marketing business — the second-largest retail-media network after Amazon. KPM generated $1.4B in 2025 revenue at 75%+ operating margin (compared to ~3% on core grocery). By 2028, KPM could contribute $2.5B in revenue at the same margins — that is $1.9B in incremental operating income on a $4.5B current operating-income base. Wall Street is barely modeling this.
What Smart Money Thinks
Berkshire Hathaway built the Kroger position through 2019-2022 at an average cost basis of ~$32. The position has been steady at 50M shares for the past 14 quarters — no adds, no trims. Q1/2026 mark: $3.3B (~105% gain plus dividends). This is the classic Buffett 'set and forget' Berkshire holding — a defensive grocery name that compounds at low double-digits regardless of cycle.
Other notable smart-money: Capital Group (35M shares, unchanged); Vanguard (78M shares); BlackRock (60M shares). Active managers: Pershing Square (Ackman) initiated a 8M-share position in Q1/2026 at $63 average — Ackman's first grocery-retail position ever, citing the 'post-merger-collapse capital return acceleration' in his April 2026 investor letter. Pat Dorsey's Dorsey Asset Management entered at 1.2M shares Q4/2025.
Insider activity (Form 4): CEO Rodney McMullen sold 350,000 shares in March 2026 at $68 (routine 10b5-1 plan, his standard quarterly disposition). CFO David Kennerley joined September 2025 — bought 12,000 shares in his first month at $61 (open-market). No other insider buying signals, but Kennerley's buy is the textbook 'new CFO confidence' tell.
Explore the BMI Smart-Money Tracker →
📈 The 3 Real Bull Points
With the $24.6B Albertsons merger blocked December 2024, Kroger received a $600M termination fee and rerouted M&A cash into a $5B accelerated buyback for 2026-2027. At a $42B market cap, that is a 12% buyback yield compressed into 24 months — among the highest in the S&P 500 consumer-defensive sector. Combined with the 2.1% dividend, total capital return reaches 14% annualized.
KPM generated $1.4B in 2025 revenue at 75%+ operating margin — the second-largest retail-media network after Amazon. By 2028, KPM is expected to scale to $2.5B revenue at the same margins, contributing $1.9B in incremental operating income on a current $4.5B operating-income base. This is structurally unmodeled by sell-side, which treats KPM as a noise variable.
Pershing Square (Ackman) initiated an 8M-share Kroger position in Q1/2026 at $63 average — his first-ever grocery-retail position. Berkshire holds 50M shares unchanged for 14 quarters. Two of the highest-conviction US public-equity active managers positioned positively on Kroger inside the same window. The shared thesis: post-merger-collapse capital-return acceleration + KPM retail-media optionality.
📉 The 3 Real Bear Points
Kroger operates at a 3.4% operating margin, the structural reality of US grocery retail. Every 100bps of margin compression (from labor cost inflation, supplier price increases, or aggressive Walmart/Aldi pricing) translates to $1.5B in annual operating income loss. The 2024-2025 wage settlements (UFCW union contracts) added 180bps of cost pressure that is only partially offset by price increases.
The US grocery market is the most competitive in the world. Walmart Supercenter, Amazon Fresh, and Aldi all expanded units by 8-12% in 2025. Kroger's share gain in 2024 was 30bps, but the gain is decelerating. If 2027 share growth stalls or reverses, the $5B buyback math compresses and the multiple compresses 2-3 turns.
Kroger's reported D/E of 416% is structural for capital-intensive grocery retail. Total long-term debt: $19B at 4.4% blended rate. The 2026-2028 maturity wall ($2.4B per year) refinances into 5.5%+ rates. Annual interest expense rises $80-120M through 2028 — a 3-5% EPS drag in a low-margin business where every percent matters.
Valuation in Context
Kroger trades at a forward P/E of 11.7× and EV/EBITDA of 7.5× as of May 2026. Comparable grocery peers: Walmart (29× — premium for Sam's Club + e-commerce), Costco (49×), Albertsons (12×), Sprouts (32×). Kroger's discount reflects the slim grocery margin reality. The bull case (Bank of America, JP Morgan) values KR at $80-86 based on the $5B buyback compression + KPM retail-media scaling. The bear case (Wells Fargo) at $61 assumes grocery share losses continue and KPM growth stalls. Wall Street analyst targets range from $61 (Wells Fargo) to $86 (BofA), median $76 vs. current $66 — 15% upside before the 2.1% dividend. Combined with the buyback yield of ~12% over 2026-2027, total capital return is unusually attractive.
🗓️ Next 3 Catalyst Dates
- September 2026: Q2/2026 earnings (Kroger fiscal year ends January) — same-store sales + KPM revenue growth critical KPIs
- December 2026: Q3/2026 earnings — first formal post-Kennerley-CFO 2027 guidance and capital-allocation framework
- March 2027: Kroger Investor Day — first formal KPM standalone disclosure as the company prepares to break it out as a separate segment
💬 Daniel's Take
Kroger is the cleanest 'defensive compounder with hidden growth option' I track. The $5B buyback acceleration is the math-driven catalyst, and Kroger Precision Marketing is the under-discussed retail-media optionality that nobody on the sell-side is properly modeling. Ackman's Q1/2026 entry alongside Berkshire's 14-quarter steady hold is the coordinated smart-money signal that validates both legs of the thesis. What I do NOT love at $66 is the slim margin — a Walmart-Aldi pricing war could compress 2027 EPS materially. I hold KR at 2% of my portfolio with active-add zone below $58. The 12% buyback yield over 2026-2027 plus the 2.1% dividend gives you 14% annualized total capital return — and that pays you to wait.
Sources (3)
Disclaimer: This article is not investment advice. Investing in stocks carries risks, including total loss.
Where can I buy Kroger?
Compare top-rated brokers — low fees, trusted providers, fully regulated.