Is The Kroger Co. (KR) a Cheap Food Stock to Buy According to Hedge Funds?

The Kroger Co. (KR), one of the largest supermarket chains in the United States, has been gaining attention from hedge funds and other investors due to its strong financial performance and growth prospects. With a market capitalization of $46.9 billion and an enterprise value of $63.33 billion, the company has been a popular choice among analysts, who have set an average price target of $66.69, indicating a potential increase of 2.89% from the current price of $64.82. The consensus rating is "Buy," suggesting that analysts expect the stock to perform well in the near term.



One of the primary factors driving the recent interest of hedge funds in The Kroger Co. is its strong financial performance. The company has demonstrated consistent revenue growth, with sales increasing from $122.29 billion in 2020 to $152.10 billion in 2024. Additionally, earnings per share (EPS) have grown from $2.04 in 2020 to $4.58 in 2024. This strong financial performance indicates that the company is well-positioned for continued growth and profitability.

Another factor that has attracted hedge funds to The Kroger Co. is its expansion and innovation initiatives. The company has been expanding its business through various acquisitions and strategic partnerships, such as the acquisition of Home Chef and the launch of its own private label brands. These strategic moves have helped the company diversify its revenue streams and tap into new markets. Furthermore, Kroger's investment in technology and digital platforms, such as its online grocery delivery service and the expansion of its Kroger Plus loyalty program, has positioned the company to capitalize on the growing e-commerce trend.

The Kroger Co.'s dividend history and yield also make it an attractive investment for income-oriented investors. The company has a history of consistent dividend growth, with a 10-year dividend growth rate of 10.62%. While the current dividend yield of 1.98% is lower than the average dividend yield of 2.5% for the S&P 500 Consumer Staples sector, the company's commitment to returning value to shareholders through dividends and its history of increasing those dividends over time make it an appealing option for investors seeking income.

In comparison to other food stocks, The Kroger Co.'s lower dividend yield may be offset by its history of consistent dividend growth and its commitment to returning value to shareholders. Additionally, the company's strong financial performance and stable business model may provide a more reliable source of income than other food stocks with higher dividend yields but less stable financial performance.

In conclusion, The Kroger Co.'s strong financial performance, expansion initiatives, and dividend history make it an attractive investment for both growth-oriented and income-oriented investors. While the company's lower dividend yield compared to other food stocks may be a concern for some investors, its history of consistent dividend growth and commitment to returning value to shareholders make it a compelling option for those seeking income. As hedge funds continue to invest in the company, it is clear that The Kroger Co. is well-positioned for long-term growth and success.