Entering text into the input field will update the search result below

A Beaten-Down Dividend Growth Name: Deep Value In Kroger

Apr. 10, 2018 3:11 AM ETThe Kroger Co. (KR)WMT, AMZN7 Comments


  • Shares of Kroger have been beaten down by nearly one-third in the last year and a half, with a major leg down following the most recent earnings.
  • The fundamental picture suggests there are strengths and weaknesses in key indicators, and while this justifies some selling, we believe it is overdone.
  • We see deep value at $20 even utilizing the conservative end of 2018 guidance.
  • Keep in mind this is a dividend growth name.
  • The company is innovating by pushing for digital improvements, testing concept restaurants and utilizing smart pricing.

Kroger (NYSE:KR) has been a battleground stock for over a year. With the most recent action in the name, we alerted members of BAD BEAT Investing to this stock last week but we feel it is prudent to share this with the broader Seeking Alpha community. It is our thesis that despite flat earnings, sentiment has driven this name into value territory. The company remains highly profitable, and is in our opinion a valuable long-term investment for dividend income, as well as market value capital gain.

Recent price action

We believe that the stock has seen an incredible fall and could be under pressure in the coming months, allowing the savvy investor to pick his/her spots to enter the name:

Source: Yahoo finance

We are of the opinion that Kroger shares are in value territory and are a bargain the closer they get to $20. At $20 a share, or below, shares offer deep value in our opinion. So what is going on here with this action?

Latest earnings resulted in another leg down

The most recent earnings were painful, but Kroger’s strategic developments and large market presence will give them an edge in the grocery industry for years to come. While there are 'scary' and 'new' headwinds in the form of strong industry competitors, we think these fears are overblown. Despite the convenience of online shopping, most groceries are still purchased in person. That said, Kroger has also successfully managed to compete in this regard as well. We see them as undervalued based on even modest quantitative forecasts, as well as new strategic initiatives.

When we think about the most recent few quarters, the key takeaways to be aware of are that sales are growing, margins have been slightly pressured, and earnings are about flat. While guidance is shaky, the stock is no longer

What are you waiting for? Join other WINNERS Now!

We've generated thousands of profitable ideas over the last 7 years. We've spent countless hours discussing our investment ideas and engaging with others on their ideas.

We want YOU to start WINNING by joining BAD BEAT Investing for a one-time-only introductory price that is less than a cup of coffee a day.

For the next 7 subscribers ONLY who sign up in the next two weeks:

You will receive LIFETIME access for just $1.36 per day. This will be a legacy price, ONLY available to YOU.

Are you going to get in the game? Become a founding member of the BAD BEAT Investing Philosophy, and let's start WINNING together.

This article was written by

Quad 7 Capital profile picture
The #1 service for high performing trades run by active hedge fund analysts

We have made millionaires! We are proud to have created thousands of WINNERS. We are the team behind the top performing investing group BAD BEAT Investing. Quad 7 Capital was founded in 2017 by a team that consists of a long time investor, health researcher, financial author, professor, professional cardplayer, and hedge fund analysts.

The BAD BEAT Investing service is a specialized carve out of Quad 7 Capital and launched in 2018. The service is run by a team of hedge fund analysts. This a top performing investing group service relative to market returns. It is focused on trading opportunistic inflections, and leveraging mispriced stocks and momentum driven events for rapid-return swing trades, options education, and long-term investments. We also teach investors how to hedge their portfolios. Further, it offers a direct access line to our traders all day during market hours and provides daily market commentary.

Quad 7 Capital as a whole has expertise in business, policy, economics, mathematics, game theory and the sciences. The company has experience with government, academia, and private industry, including investment banking, boutique trading firms, and hedge funds. We offer market opinion and analysis, and we cover a wide range of sectors and companies, with particular emphasis on news related items and analyses on growth companies, dividend stocks, banks/financials, industrials, mREITS, biotechnology/ pharmaceuticals, precious metals, and small-cap companies.

If you want to win, follow us, and if you want to make real money, sign up to BAD BEAT Investing today. 

Analyst’s Disclosure: I/we have no positions in any stocks mentioned, but may initiate a long position in KR over the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

Recommended For You

To ensure this doesn’t happen in the future, please enable Javascript and cookies in your browser.
Is this happening to you frequently? Please report it on our feedback forum.
If you have an ad-blocker enabled you may be blocked from proceeding. Please disable your ad-blocker and refresh.