Intrinsic value of Kroger - KR

Previous Close

$27.22

  Intrinsic Value

$30.44

stock screener

  Rating & Target

hold

+12%

Previous close

$27.22

 
Intrinsic value

$30.44

 
Up/down potential

+12%

 
Rating

hold

*Intrinsic value change (in %) minus stock price change (in %) in the past 12 months.

We calculate the intrinsic value of KR stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

Please visit our new site that uses elements of artificial intelligence for stock valuation: artificial intelligence value of Kroger (KR) stock.

STOCK VALUATION INPUT DATA

Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Shares outstanding, mln

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
2017(a)
   2018
   2019
   2020
   2021
   2022
   2023
   2024
   2025
   2026
   2027
   2028
   2029
   2030
   2031
   2032
   2033
   2034
   2035
   2036
   2037
   2038
   2039
   2040
   2041
   2042
   2043
   2044
   2045
   2046
   2047

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  5.01
  4.50
  4.55
  4.59
  4.64
  4.67
  4.70
  4.73
  4.76
  4.78
  4.81
  4.83
  4.84
  4.86
  4.87
  4.89
  4.90
  4.91
  4.92
  4.92
  4.93
  4.94
  4.95
  4.95
  4.96
  4.96
  4.96
  4.97
  4.97
  4.97
  4.98
Revenue, $m
  115,337
  120,527
  126,011
  131,801
  137,911
  144,354
  151,146
  158,301
  165,838
  173,773
  182,125
  190,914
  200,160
  209,885
  220,112
  230,866
  242,172
  254,056
  266,547
  279,674
  293,469
  307,964
  323,194
  339,195
  356,004
  373,662
  392,211
  411,695
  432,160
  453,655
  476,231
Variable operating expenses, $m
 
  116,536
  121,825
  127,409
  133,301
  139,514
  146,064
  152,964
  160,232
  167,885
  175,939
  184,112
  193,028
  202,407
  212,270
  222,641
  233,544
  245,005
  257,051
  269,710
  283,014
  296,992
  311,679
  327,110
  343,320
  360,349
  378,238
  397,027
  416,763
  437,492
  459,264
Fixed operating expenses, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total operating expenses, $m
  111,901
  116,536
  121,825
  127,409
  133,301
  139,514
  146,064
  152,964
  160,232
  167,885
  175,939
  184,112
  193,028
  202,407
  212,270
  222,641
  233,544
  245,005
  257,051
  269,710
  283,014
  296,992
  311,679
  327,110
  343,320
  360,349
  378,238
  397,027
  416,763
  437,492
  459,264
Operating income, $m
  3,436
  3,991
  4,186
  4,393
  4,610
  4,840
  5,082
  5,337
  5,605
  5,888
  6,186
  6,802
  7,131
  7,478
  7,842
  8,225
  8,628
  9,052
  9,497
  9,964
  10,456
  10,972
  11,515
  12,085
  12,684
  13,313
  13,974
  14,668
  15,397
  16,163
  16,967
EBITDA, $m
  5,776
  6,450
  6,743
  7,053
  7,380
  7,725
  8,088
  8,471
  8,874
  9,299
  9,746
  10,216
  10,711
  11,231
  11,779
  12,354
  12,959
  13,595
  14,264
  14,966
  15,704
  16,480
  17,295
  18,151
  19,051
  19,996
  20,988
  22,031
  23,126
  24,276
  25,484
Interest expense (income), $m
  505
  536
  588
  643
  701
  762
  826
  893
  965
  1,040
  1,119
  1,202
  1,290
  1,382
  1,479
  1,581
  1,688
  1,801
  1,920
  2,044
  2,175
  2,312
  2,457
  2,609
  2,768
  2,936
  3,112
  3,297
  3,491
  3,695
  3,910
Earnings before tax, $m
  2,914
  3,455
  3,598
  3,750
  3,910
  4,078
  4,256
  4,443
  4,641
  4,848
  5,067
  5,600
  5,841
  6,096
  6,363
  6,644
  6,940
  7,250
  7,577
  7,920
  8,281
  8,660
  9,058
  9,476
  9,915
  10,377
  10,862
  11,371
  11,906
  12,468
  13,058
Tax expense, $m
  957
  933
  972
  1,012
  1,056
  1,101
  1,149
  1,200
  1,253
  1,309
  1,368
  1,512
  1,577
  1,646
  1,718
  1,794
  1,874
  1,958
  2,046
  2,138
  2,236
  2,338
  2,446
  2,559
  2,677
  2,802
  2,933
  3,070
  3,215
  3,366
  3,526
Net income, $m
  1,975
  2,522
  2,627
  2,737
  2,854
  2,977
  3,107
  3,244
  3,388
  3,539
  3,699
  4,088
  4,264
  4,450
  4,645
  4,850
  5,066
  5,293
  5,531
  5,782
  6,045
  6,322
  6,612
  6,917
  7,238
  7,575
  7,929
  8,301
  8,691
  9,101
  9,532

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  322
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  36,505
  37,807
  39,527
  41,343
  43,259
  45,280
  47,411
  49,655
  52,019
  54,508
  57,128
  59,885
  62,785
  65,836
  69,044
  72,417
  75,964
  79,691
  83,610
  87,727
  92,054
  96,601
  101,378
  106,397
  111,670
  117,209
  123,027
  129,139
  135,558
  142,301
  149,382
Adjusted assets (=assets-cash), $m
  36,183
  37,807
  39,527
  41,343
  43,259
  45,280
  47,411
  49,655
  52,019
  54,508
  57,128
  59,885
  62,785
  65,836
  69,044
  72,417
  75,964
  79,691
  83,610
  87,727
  92,054
  96,601
  101,378
  106,397
  111,670
  117,209
  123,027
  129,139
  135,558
  142,301
  149,382
Revenue / Adjusted assets
  3.188
  3.188
  3.188
  3.188
  3.188
  3.188
  3.188
  3.188
  3.188
  3.188
  3.188
  3.188
  3.188
  3.188
  3.188
  3.188
  3.188
  3.188
  3.188
  3.188
  3.188
  3.188
  3.188
  3.188
  3.188
  3.188
  3.188
  3.188
  3.188
  3.188
  3.188
Average production assets, $m
  21,421
  22,418
  23,438
  24,515
  25,651
  26,850
  28,113
  29,444
  30,846
  32,322
  33,875
  35,510
  37,230
  39,039
  40,941
  42,941
  45,044
  47,254
  49,578
  52,019
  54,585
  57,281
  60,114
  63,090
  66,217
  69,501
  72,951
  76,575
  80,382
  84,380
  88,579
Working capital, $m
  -2,520
  -603
  -630
  -659
  -690
  -722
  -756
  -792
  -829
  -869
  -911
  -955
  -1,001
  -1,049
  -1,101
  -1,154
  -1,211
  -1,270
  -1,333
  -1,398
  -1,467
  -1,540
  -1,616
  -1,696
  -1,780
  -1,868
  -1,961
  -2,058
  -2,161
  -2,268
  -2,381
Total debt, $m
  14,077
  15,082
  16,484
  17,965
  19,526
  21,174
  22,910
  24,739
  26,666
  28,694
  30,830
  33,076
  35,440
  37,926
  40,541
  43,290
  46,180
  49,218
  52,412
  55,768
  59,294
  63,000
  66,893
  70,984
  75,281
  79,795
  84,537
  89,518
  94,750
  100,245
  106,017
Total liabilities, $m
  29,807
  30,812
  32,214
  33,695
  35,256
  36,904
  38,640
  40,469
  42,396
  44,424
  46,560
  48,806
  51,170
  53,656
  56,271
  59,020
  61,910
  64,948
  68,142
  71,498
  75,024
  78,730
  82,623
  86,714
  91,011
  95,525
  100,267
  105,248
  110,480
  115,975
  121,747
Total equity, $m
  6,698
  6,994
  7,312
  7,648
  8,003
  8,377
  8,771
  9,186
  9,624
  10,084
  10,569
  11,079
  11,615
  12,180
  12,773
  13,397
  14,053
  14,743
  15,468
  16,230
  17,030
  17,871
  18,755
  19,684
  20,659
  21,684
  22,760
  23,891
  25,078
  26,326
  27,636
Total liabilities and equity, $m
  36,505
  37,806
  39,526
  41,343
  43,259
  45,281
  47,411
  49,655
  52,020
  54,508
  57,129
  59,885
  62,785
  65,836
  69,044
  72,417
  75,963
  79,691
  83,610
  87,728
  92,054
  96,601
  101,378
  106,398
  111,670
  117,209
  123,027
  129,139
  135,558
  142,301
  149,383
Debt-to-equity ratio
  2.102
  2.160
  2.250
  2.350
  2.440
  2.530
  2.610
  2.690
  2.770
  2.850
  2.920
  2.990
  3.050
  3.110
  3.170
  3.230
  3.290
  3.340
  3.390
  3.440
  3.480
  3.530
  3.570
  3.610
  3.640
  3.680
  3.710
  3.750
  3.780
  3.810
  3.840
Adjusted equity ratio
  0.176
  0.185
  0.185
  0.185
  0.185
  0.185
  0.185
  0.185
  0.185
  0.185
  0.185
  0.185
  0.185
  0.185
  0.185
  0.185
  0.185
  0.185
  0.185
  0.185
  0.185
  0.185
  0.185
  0.185
  0.185
  0.185
  0.185
  0.185
  0.185
  0.185
  0.185

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  1,975
  2,522
  2,627
  2,737
  2,854
  2,977
  3,107
  3,244
  3,388
  3,539
  3,699
  4,088
  4,264
  4,450
  4,645
  4,850
  5,066
  5,293
  5,531
  5,782
  6,045
  6,322
  6,612
  6,917
  7,238
  7,575
  7,929
  8,301
  8,691
  9,101
  9,532
Depreciation, amort., depletion, $m
  2,340
  2,459
  2,557
  2,660
  2,770
  2,885
  3,006
  3,134
  3,269
  3,411
  3,560
  3,414
  3,580
  3,754
  3,937
  4,129
  4,331
  4,544
  4,767
  5,002
  5,249
  5,508
  5,780
  6,066
  6,367
  6,683
  7,015
  7,363
  7,729
  8,113
  8,517
Funds from operations, $m
  3,533
  4,981
  5,183
  5,398
  5,624
  5,862
  6,113
  6,378
  6,657
  6,950
  7,259
  7,502
  7,844
  8,204
  8,582
  8,979
  9,397
  9,837
  10,298
  10,784
  11,294
  11,829
  12,392
  12,984
  13,605
  14,258
  14,944
  15,664
  16,420
  17,215
  18,049
Change in working capital, $m
  -739
  -26
  -27
  -29
  -31
  -32
  -34
  -36
  -38
  -40
  -42
  -44
  -46
  -49
  -51
  -54
  -57
  -59
  -62
  -66
  -69
  -72
  -76
  -80
  -84
  -88
  -93
  -97
  -102
  -107
  -113
Cash from operations, $m
  4,272
  5,006
  5,211
  5,427
  5,654
  5,894
  6,147
  6,414
  6,694
  6,990
  7,301
  7,546
  7,890
  8,252
  8,633
  9,033
  9,454
  9,896
  10,361
  10,849
  11,363
  11,902
  12,469
  13,064
  13,689
  14,346
  15,036
  15,761
  16,523
  17,322
  18,162
Maintenance CAPEX, $m
  0
  -2,060
  -2,156
  -2,254
  -2,357
  -2,466
  -2,582
  -2,703
  -2,831
  -2,966
  -3,108
  -3,257
  -3,414
  -3,580
  -3,754
  -3,937
  -4,129
  -4,331
  -4,544
  -4,767
  -5,002
  -5,249
  -5,508
  -5,780
  -6,066
  -6,367
  -6,683
  -7,015
  -7,363
  -7,729
  -8,113
New CAPEX, $m
  -3,699
  -998
  -1,020
  -1,077
  -1,136
  -1,198
  -1,263
  -1,331
  -1,402
  -1,476
  -1,553
  -1,635
  -1,720
  -1,809
  -1,902
  -2,000
  -2,103
  -2,210
  -2,323
  -2,442
  -2,566
  -2,696
  -2,833
  -2,976
  -3,127
  -3,284
  -3,450
  -3,624
  -3,807
  -3,998
  -4,199
Cash from investing activities, $m
  -3,875
  -3,058
  -3,176
  -3,331
  -3,493
  -3,664
  -3,845
  -4,034
  -4,233
  -4,442
  -4,661
  -4,892
  -5,134
  -5,389
  -5,656
  -5,937
  -6,232
  -6,541
  -6,867
  -7,209
  -7,568
  -7,945
  -8,341
  -8,756
  -9,193
  -9,651
  -10,133
  -10,639
  -11,170
  -11,727
  -12,312
Free cash flow, $m
  397
  1,949
  2,035
  2,096
  2,161
  2,229
  2,302
  2,380
  2,461
  2,548
  2,639
  2,654
  2,756
  2,863
  2,977
  3,096
  3,222
  3,354
  3,494
  3,640
  3,795
  3,957
  4,128
  4,308
  4,496
  4,695
  4,903
  5,123
  5,353
  5,595
  5,850
Issuance/(repayment) of debt, $m
  1,861
  1,327
  1,402
  1,480
  1,562
  1,647
  1,736
  1,829
  1,927
  2,029
  2,135
  2,247
  2,364
  2,486
  2,615
  2,749
  2,890
  3,038
  3,193
  3,356
  3,527
  3,706
  3,893
  4,090
  4,297
  4,514
  4,742
  4,981
  5,232
  5,495
  5,771
Issuance/(repurchase) of shares, $m
  -1,698
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  77
  1,327
  1,402
  1,480
  1,562
  1,647
  1,736
  1,829
  1,927
  2,029
  2,135
  2,247
  2,364
  2,486
  2,615
  2,749
  2,890
  3,038
  3,193
  3,356
  3,527
  3,706
  3,893
  4,090
  4,297
  4,514
  4,742
  4,981
  5,232
  5,495
  5,771
Total cash flow (excl. dividends), $m
  474
  3,277
  3,437
  3,576
  3,723
  3,877
  4,039
  4,209
  4,388
  4,576
  4,775
  4,901
  5,120
  5,350
  5,591
  5,845
  6,112
  6,392
  6,687
  6,996
  7,321
  7,663
  8,021
  8,398
  8,794
  9,209
  9,645
  10,104
  10,585
  11,090
  11,621
Retained Cash Flow (-), $m
  122
  -296
  -318
  -336
  -355
  -374
  -394
  -415
  -437
  -460
  -485
  -510
  -537
  -564
  -594
  -624
  -656
  -690
  -725
  -762
  -801
  -841
  -884
  -929
  -975
  -1,025
  -1,076
  -1,131
  -1,188
  -1,247
  -1,310
Prev. year cash balance distribution, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash available for distribution, $m
 
  2,980
  3,119
  3,240
  3,368
  3,503
  3,644
  3,794
  3,951
  4,116
  4,290
  4,391
  4,583
  4,785
  4,998
  5,221
  5,456
  5,703
  5,962
  6,235
  6,521
  6,822
  7,138
  7,469
  7,818
  8,184
  8,569
  8,973
  9,397
  9,843
  10,311
Discount rate, %
 
  8.00
  8.40
  8.82
  9.26
  9.72
  10.21
  10.72
  11.26
  11.82
  12.41
  13.03
  13.68
  14.37
  15.09
  15.84
  16.63
  17.46
  18.34
  19.25
  20.22
  21.23
  22.29
  23.40
  24.57
  25.80
  27.09
  28.45
  29.87
  31.36
  32.93
PV of cash for distribution, $m
 
  2,760
  2,654
  2,514
  2,363
  2,202
  2,034
  1,860
  1,683
  1,506
  1,332
  1,141
  984
  836
  699
  575
  465
  370
  288
  220
  164
  120
  85
  59
  40
  26
  17
  10
  6
  4
  2
Current shareholders' claim on cash, %
  100
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0

The Kroger Co. (Kroger) manufactures and processes food for sale in its supermarkets. The Company operates supermarkets, multi-department stores, jewelry stores and convenience stores throughout the United States. As of January 28, 2017, it had operated approximately 4,000 owned or leased supermarkets, convenience stores, fine jewelry stores, distribution warehouses and food production plants through divisions, subsidiaries or affiliates. These facilities are located throughout the United States. As of January 28, 2017, Kroger operated, either directly or through its subsidiaries, 2,796 supermarkets under a range of local banner names, of which 2,255 had pharmacies and 1,445 had fuel centers. As of January 28, 2017, the Company offered ClickList and Harris Teeter ExpressLane, personalized, order online, pick up at the store services at 637 of its supermarkets. P$$T, Check This Out and Heritage Farm are the three brands. Its other brands include Simple Truth and Simple Truth Organic.

FINANCIAL RATIOS  of  Kroger (KR)

Valuation Ratios
P/E Ratio 12.7
Price to Sales 0.2
Price to Book 3.8
Price to Tangible Book
Price to Cash Flow 5.9
Price to Free Cash Flow 43.9
Growth Rates
Sales Growth Rate 5%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 10.5%
Cap. Spend. - 3 Yr. Gr. Rate 9.7%
Financial Strength
Quick Ratio 0
Current Ratio 0.1
LT Debt to Equity 176.5%
Total Debt to Equity 210.2%
Interest Coverage 7
Management Effectiveness
Return On Assets 6.6%
Ret/ On Assets - 3 Yr. Avg. 6.9%
Return On Total Capital 10%
Ret/ On T. Cap. - 3 Yr. Avg. 10.5%
Return On Equity 29.2%
Return On Equity - 3 Yr. Avg. 31.5%
Asset Turnover 3.3
Profitability Ratios
Gross Margin 22.4%
Gross Margin - 3 Yr. Avg. 21.9%
EBITDA Margin 5%
EBITDA Margin - 3 Yr. Avg. 4.9%
Operating Margin 3%
Oper. Margin - 3 Yr. Avg. 3%
Pre-Tax Margin 2.5%
Pre-Tax Margin - 3 Yr. Avg. 2.6%
Net Profit Margin 1.7%
Net Profit Margin - 3 Yr. Avg. 1.7%
Effective Tax Rate 32.8%
Eff/ Tax Rate - 3 Yr. Avg. 33.6%
Payout Ratio 21.7%

KR stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the KR stock intrinsic value calculation we used $115337 million for the last fiscal year's total revenue generated by Kroger. The default revenue input number comes from 2017 income statement of Kroger. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our KR stock valuation model: a) initial revenue growth rate of 4.5% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 8%, whose default value for KR is calculated based on our internal credit rating of Kroger, is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of Kroger.
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of KR stock the variable cost ratio is equal to 96.7%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $0 million in the base year in the intrinsic value calculation for KR stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 3.9% for Kroger.

Corporate tax rate of 27% is the nominal tax rate for Kroger. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the KR stock is equal to 0%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for KR are equal to 18.6%.

Life of production assets of 10.4 years is the average useful life of capital assets used in Kroger operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for KR is equal to -0.5%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $6698 million for Kroger - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 887.796 million for Kroger is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of Kroger at the current share price and the inputted number of shares is $24.2 billion.

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COMPANY NEWS

▶ Kroger Fourth Quarter Conference Call With Investors   [Feb-22-18 10:00AM  PR Newswire]
▶ Market recap for Tuesday, February 20   [05:16PM  Yahoo Finance Video]
▶ These investors were the biggest sellers of Kroger stock last quarter   [Feb-15-18 05:00PM  American City Business Journals]
▶ Kroger Opens Culinary Innovation Center   [09:00AM  PR Newswire]
▶ Walmarts big bet is paying off in its battle against Amazon   [Feb-14-18 11:13AM  Yahoo Finance Video]
▶ Will Boxed's Rejection Lead Kroger to a Better Deal?   [Feb-12-18 09:06AM  Motley Fool]
▶ Alibaba Could Take Kroger to the Next Level Fast   [Feb-11-18 12:16PM  Motley Fool]
▶ Why The Kroger Co. Stock Gained 11% Last Month   [Feb-07-18 01:23PM  Motley Fool]
▶ Kroger Celebrates Black Heritage Month   [09:00AM  PR Newswire]
▶ Jeff Auxier's 4th Quarter Shareholder Letter   [Feb-06-18 02:27PM  GuruFocus.com]
▶ [$$] Kroger in Deal to Sell Convenience-Store Business to U.K. Firm   [Feb-05-18 11:55PM  The Wall Street Journal]
▶ Kroger agrees to $2.2 billion deal   [04:56PM  American City Business Journals]
▶ Closing Bell: LIVE MARKETS BLOG   [04:22PM  TheStreet.com]
▶ [$$] Kroger Reaches Deal to Sell Convenience-Store Business   [10:55AM  The Wall Street Journal]
▶ Ralphs to Introduce Scan, Bag, Go Checkout Service   [Feb-02-18 03:25PM  PR Newswire]
▶ Casey's Eyes Kroger's Convenience Stores as Activist Hovers   [Jan-26-18 05:00PM  TheStreet.com]
▶ Closing Bell: LIVE MARKETS BLOG   [04:02PM  TheStreet.com]
▶ Will Kroger Team Up with Alibaba?   [08:27AM  Market Realist]
▶ Kroger reportedly in talks with major online retailer Alibaba   [08:07AM  American City Business Journals]
▶ What If Alibaba, Kroger Teamed Up?   [04:20PM  Barrons.com]
▶ What the New Amazon Prime Charges Look Like   [09:03AM  Market Realist]
▶ Whats Next after Amazon Go Goes Public?   [04:05PM  Market Realist]
▶ Where Amazon and Municipal Bond Finance Collide   [12:21PM  Market Exclusive]
▶ Amazon Go cashier-free convenience store opens for business   [Jan-22-18 10:55AM  Yahoo Finance Video]
▶ Amazon-Whole Foods Is Not What the Market Expected   [Jan-21-18 07:12AM  Motley Fool]
▶ Kroger Goes After Whole Foods Head-On   [Jan-19-18 04:08PM  Motley Fool]
▶ Are Cashiers' Days Numbered?   [08:01AM  Motley Fool]
▶ Is The Kroger Co (NYSE:KR) A Financially Sound Company?   [Jan-18-18 11:44PM  Simply Wall St.]
Financial statements of KR
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