Should You Invest in Kroger?

PHOTO CREDIT: Kroger

OVERVIEW

The Kroger Company is the largest pure grocery store retailer in the United States. It operates over 2,750 grocery stores across the United States and sells gasoline from over 1500 stations across the country. It offers grocery and other essential products in its stores.

Why You Should?

  1. The COVID-19 Pandemic has accelerated in-store sales at Kroger stores. This is because people are stocking up on groceries and other essential products and Kroger is a great stop for these consumers. The company is pandemic proof as its consumers will keep returning to buy up more products.
  2. Kroger is the largest pure grocery store chain in the United States. This allows it to have a wide reach among American consumers. This will benefit the company in the long term as it will see a high amount of return customers as well as new consumers to their stores.
  3. Kroger is a recession-proof and safe investment. This is because it offers products essential to a high quality of life during tough and normal economic times. Kroger has had stable sales during the 2008 recession and other recessions like the COVID-19 Pandemic.

Why You Should Not?

  1. Kroger faces tough competition from several large players in this industry. Some examples include Amazon and Walmart. Both of these companies have much better e-commerce sales of grocery products and consumers will select these over in-person shopping during these current times.
  2. Because of higher competition, Kroger has seen growth slow in the United States. Though the pandemic has seen sales rise, Kroger was facing issues of U.S market concentration and slowing growth due to several factors. This will negatively impact the company as sales start to slow again and as the company gets crushed by the competition.
  3. Kroger has seen weak financials due to the cons mentioned above. This has seen its debt increase to over 14 billion dollars and has also seen revenue and profit growth fall. This will negatively impact the company until it figures out a way to grow in the digital space to attract more customers away from their competition like Walmart. In the financial year of 2020, the company reported revenues of around 122.3 billion and profits of around 1.7 billion. The company reported less revenue in the financial year of 2019 when it reported this metric at around 121.85 billion. However, the company also reported 3.1 billion in profit in the financial year of 2019 which is more than what is reported in the financial year 2020.
PHOTO CREDIT: Yahoo Finance

MY OPINION

In my opinion, I think that investors are better off buying Walmart instead of Kroger. This is because of Kroger’s lack of digital sales which causes it to have slower sales, profit, and revenue growth. However, Kroger can benefit if it solves its issues because it is the largest grocery store chain in the United States and has a wide consumer reach.

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Aaditya Patel is a writer who publishes analysis on companies publicly traded on the NYSE. Follow him @the_investing787 on Instagram for summary posts.

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Aaditya Patel

Aaditya Patel

Aaditya Patel is a writer who publishes analysis on companies publicly traded on the NYSE. Follow him @the_investing787 on Instagram for summary posts.

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