Equity valuation

: The Kroger Co.

Abstract

This paper conducts an equity valuation to determine a target share price for The Kroger Company, a U.S. food and retail company listed on the New York Stock Exchange. Based on extensive data regarding the target company’s characteristics, macroeconomic developments as well as industry and market trends, the paper applies suitable intrinsic and relative valuation techniques. The grocery retail industry is characterized by its stable and predictable growth, which has enabled its main players to achieve strong returns in recent years, despite challenging macroeconomic factors and a highly competitive landscape with limited product differentiation opportunities. Kroger stands out through its focus on a fresh product offering and advancements of digital capabilities, which aligns its strategy with evolving customer trends and provides resilience during recent market shocks. However, Kroger continues to face substantial challenges due to the industry competitiveness and macroeconomic circumstances. Based on the thorough analyses, the paper issues a <BUY= recommendation, as it predicts a 1-year forward return of 19.4% compared to Kroger’s share price of $57.30 as of 30.09.2024.The recommendation is in line with the findings of the LSEG Stock Report, which provides an accurate summary of the general market consensus.

Date of Award	4 Feb 2025
Original language	English
Awarding Institution	Universidade Católica Portuguesa
Supervisor	José Carlos Tudela Martins (Supervisor)