DCF Studio

    KR · NYQ · Consumer Defensive

    The Kroger Co.

    Also onShortfallConsensus DriftCrosscheck

    Implied value per share

    USD 55.16

    Market price

    USD 68.36

    Implied upside

    -19.3%

    10-year forecast · Perpetuity growth terminal value · Mid-year discounting · Base case · Price 2026-11-02 · Accounts to 2026-01-31

    Value Per Share

    Perpetuity growth
    USD 55.16-19.3%
    Exit multiple
    USD 74.82+9.4%
    Market price
    USD 68.36

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (USD). Outflows negative.

    0bn1bn3bnFY27FY28FY29FY30FY31FY32FY33FY34FY35FY36
    Nominal FCFFDiscounted to todayUSD
    LineFY27FY28FY29FY30FY31FY32FY33FY34FY35FY36CAGR
    RevenueUSD 150.8bnUSD 153.2bnUSD 155.8bnUSD 158.6bnUSD 161.7bnUSD 165.0bnUSD 168.5bnUSD 172.3bnUSD 176.5bnUSD 180.9bn+2.0%
    EBITUSD 3.3bnUSD 3.3bnUSD 3.4bnUSD 3.5bnUSD 3.5bnUSD 3.6bnUSD 3.7bnUSD 3.8bnUSD 3.9bnUSD 4.0bn+2.0%
    NOPATUSD 2.6bnUSD 2.6bnUSD 2.7bnUSD 2.7bnUSD 2.8bnUSD 2.8bnUSD 2.9bnUSD 3.0bnUSD 3.0bnUSD 3.1bn+2.0%
    Add depreciation & amortisationUSD 3.8bnUSD 3.9bnUSD 4.0bnUSD 4.0bnUSD 4.1bnUSD 4.2bnUSD 4.3bnUSD 4.4bnUSD 4.5bnUSD 4.6bn+2.0%
    Less capital expenditureUSD -3.8bnUSD -3.9bnUSD -4.0bnUSD -4.2bnUSD -4.3bnUSD -4.5bnUSD -4.7bnUSD -4.9bnUSD -5.1bnUSD -5.3bn+3.8%
    Capex, % of revenue2.5%2.5%2.6%2.6%2.7%2.7%2.8%2.8%2.9%2.9%-
    Less increase in working capitalUSD 21.3mUSD 16.3mUSD 17.8mUSD 19.3mUSD 20.9mUSD 22.6mUSD 24.3mUSD 26.1mUSD 28.1mUSD 30.1m-3.9%
    Free cashflow to firmUSD 2.7bnUSD 2.7bnUSD 2.6bnUSD 2.6bnUSD 2.6bnUSD 2.6bnUSD 2.5bnUSD 2.5bnUSD 2.5bnUSD 2.5bn-0.8%
    Discount factor0.96980.91210.85780.80670.75870.71350.67110.63110.59360.5582-
    Present valueUSD 2.6bnUSD 2.4bnUSD 2.3bnUSD 2.1bnUSD 2.0bnUSD 1.8bnUSD 1.7bnUSD 1.6bnUSD 1.5bnUSD 1.4bn-
    Present Value Of The ForecastUSD 19.4bn

    Discount Rate

    Source shown per component. All overridable above.

    Risk-free rate4.89%US 10-year Treasury (^TNX), 2026-11-02
    Equity risk premium4.23%Damodaran, January 2026
    Beta0.569Reported 0.356, pulled toward 1.0 (Blume)
    Cost of equity7.30%Risk-free + beta x equity risk premium
    Cost of debt6.00%Risk-free + 111bp, the spread for a BBB rating at 3.0x interest cover. Book interest / average debt was lower, at 2.6%.
    Market capitalisationUSD 40.4bn62.1% of capital
    Total debtUSD 24.7bn37.9% of capital, book value as a proxy
    Tax rate21.0%Effective, capped at statutory
    WACC6.33%E/V x Re + D/V x Rd x (1 - t)

    Terminal Value

    Perpetuity growth is intrinsic. The exit multiple defaults to the company's current EV/EBITDA, so it answers a different question - what the shares are worth if today's rating holds and EBITDA grows as forecast.

    Perpetuity growth at 2.50%

    Value per shareUSD 55.16

    66% of EV

    Forecast FCFF, final year
    USD 2.5bn
    Capex at depreciation, working capital in reinvestment
    USD 3.1bn
    Less reinvestment at g/ROIC (21.0% of NOPAT)
    USD -656.5m
    Capitalised
    USD 2.5bn
    ROIC (reported)
    11.9%
    Terminal value, undiscounted
    USD 66.0bn
    Terminal value, discounted
    USD 36.9bn
    Enterprise value
    USD 56.2bn
    Less net debt
    USD 20.1bn
    Equity value
    USD 36.1bn

    Exit at 10.4x EBITDA

    Value per shareUSD 74.82

    72% of EV

    Terminal value, undiscounted
    USD 89.1bn
    Terminal value, discounted
    USD 49.7bn
    Enterprise value
    USD 69.1bn
    Less net debt
    USD 20.1bn
    Equity value
    USD 49.0bn

    Spread between methods: 30%.

    Sensitivity

    Value per share (USD) by discount rate and long-run growth.

    Long-run growth
    Discount rate1.50%2.00%2.50%3.00%3.50%
    4.33%102.89118.37142.63185.56280.99
    5.33%68.9375.0383.4895.78115.11
    6.33%49.0251.6755.1659.8466.36
    7.33%35.9237.0538.5140.4342.97
    8.33%26.6427.0227.5428.2529.20

    Outlined: this model. Green text: above today's price of 68.36. Shading: distance from this model's own value.

    Priced In

    What each input would have to be to justify the current price, one at a time.

    InputActualModelImplied
    Revenue growth, a year-0.1%2.1%3.7%
    EBIT margin2.8%2.2%2.5%
    Discount rate-6.3%5.8%
    Download as Excel

    Live formulas, not pasted numbers - edit a driver and the workbook reprices.

    Yahoo Finance and RBA data. General information, not advice. Methodology.