Kroger Is a Steal Compared to Walmart

[vanzandt]

Kroger reported yesterday and it got hammered because the ceo merely "confirmed" guidance.
In the past it has always up'd guidance and that's what the Street expected.

It doesn't matter. It was a great report. I did some homework and I can't believe my eyes. Either WMT is way overpriced, or Krogers is dirt cheap.

There is not one metric where Krogers isn't better. Maybe the net margin, but they even improved that. And FCF went up huge. They paid down a lot of debt.

Look at this:

WMT forward PE 25
KR PE forward PE 10

WMT 5 year projected eps growth:5.9%
KR 5 year projected eps growth: 12%

WMT Price/cashflow 18
KR Price/cashflow 6.45

WMT P/S .67
KR P/S .23

WMT EV/EBITDA 12.7
KR EV/EBITDA 6.38

WMT dividend: 1.45%
KR dividend: 2.26%

WMT ROE 15%
KR ROE 22.8%

WMT net profit margin 1.8%
KR net profit margin 1.6%

I mean in uncertain times Wall Street loves safe stocks... and I understand why they love Walmart... but Kroger is here to stay too. It's a well run conservative company and right now at $45.50, I think it's a steal for any IRA or retirement account.

 

[BKR88]

KR is probably the easier buy now from a technical view. Pulled back to long-term support.
Exit with a close below the 42 area and wait for re-entry with a close above.
WMT is a more difficult buy now as it's approaching ATH area.
I'll probably pass though as I'm trying to switch to ETFs only.

 

[tomkat22]

Kroger workers are unionized,Walmart workers are whatever the opposite of unionized is. LOL. Probably why Kroger's prices are higher than Wally World's. Kroger's stuff might be a tad higher quality and their store a little more organized but is that worth paying the higher prices? Not in my opinion.

 

[vanzandt]

Kroger workers are unionized,Walmart workers are whatever the opposite of unionized is. LOL. Probably why Kroger's prices are higher than Wally World's. Kroger's stuff might be a tad higher quality and their store a little more organized but is that worth paying the higher prices? Not in my opinion.

I think their prices are pretty competitive. It varies on items, sales etc. Me personally, I'm not gonna waste my time just to save $0.10 on a box of cereal. Different strokes for different folks I guess.

But even at that... opinions aside... a business is a business and a sector is a sector. I can only come to a conclusion regarding a stock's price relative to its peers based on their reports and management's discussion of such. The same way the analysts do it.

If they are paying more for labor because its unionized, and they are still beating WMT on every financial metric, or most... then that tells me two things... one, its a very well run company and two, perhaps even more importantly, well paid happy employees with little turnover and the associated replacement costs.

 

[tomkat22]

Walmart must be doing something right because last time I checked they were the #1 seller of groceries in the US. Probably doesn't hurt that they have stores on every street corner.LOL. They buy in such huge quantities from their vendors and get much better "deals" because of that. Also rumors have been around for years regarding Walmart's buying agents unscrupulous,strong-arm tactics

 

[vanzandt]

Walmart must be doing something right because last time I checked they were the #1 seller of groceries in the US. Probably doesn't hurt that they have stores on every street corner.LOL. They buy in such huge quantities from their vendors and get much better "deals" because of that. Also rumors have been around for years regarding Walmart's buying agents unscrupulous,strong-arm tactics

I like wmt too. I even made that thread ... https://www.elitetrader.com/et/threads/if-i-had-to-pick-one-stock-for-the-next-24-months.373575/ They are masters of the supply chain and that's huge.

So it's not really about who's better from a personal taste standpoint, it's about comparing the valuation of two S&P 100 companies using the metrics Wall Street uses and finding a perhaps profitable mismatch between two great companies.

 

[tiddlywinks]

I first bought KR during the "essential business" point in time. Took partial profits, and maintain a free-ride long-term holding.

Here in Vegas, KR operates Smiths Food and Drug. Albertsons has a large presence here as well. Winco Foods, a private chain, is my grocery store of choice. Walmart doesn't even play in my grocery orbit.

I think the current problem is mostly about the KR-Albertsons merger which the unions do not like. Based on first hand knowledge of being a sometimes KR customer and knowing a couple of people who work at Smiths, I shed no tears for the union, and eventually will clear, imo.

VZ and the magic pencil are on target, no pun intended.

 

[murray t turtle]

Kroger workers are unionized,Walmart workers are whatever the opposite of unionized is. LOL. Probably why Kroger's prices are higher than Wally World's. Kroger's stuff might be a tad higher quality and their store a little more organized but is that worth paying the higher prices? Not in my opinion.

%%
And Kroger has a lower PE\most likely goes lower..............

 

[mervyn]

there is a reason why low price stock stays low, we just don't know why, probabaly is the management ability to execute.

 

[Ringandpinion]

Here's a wealth of data on TOS's fundamentals page. There are some drawbacks, but look at the EPS, dropped hard in 2019 but has been coming back up. 2018 was a killer year and they haven't been able to duplicate that, but they've done a stock buyback and look at the growth rate on the bottom. All in all, it is probably a good risk, maybe do one of those wheel trades where you sell puts until you get put, but I would think a covered call would be best. Not an exciting stock, but will probably make you money over time. We have Albertson's, HEB and Kroger here, Kroger competes well with those other majors.