It May Be a Good Time to Buy The Kroger Co. (KR). Here’s Why

It might not be obvious to the casual observer, but right now, today, The Kroger Co. (NYSE:KR) stock offers one of the best values available in the supermarket industry. Why?

Three reasons.

Kroger is cheap
When you stack up Kroger stock against a couple of its smaller, faster-growing rivals — Harris Teeter Supermarkets Inc (NYSE:HTSI) and The Fresh Market Inc (NASDAQ:TFM) , it’s clear that The Kroger Co. (NYSE:KR) is the cheapest of the three. Its 12.0 price-to-earnings ratio is barely half the price Harris Teeter Supermarkets Inc (NYSE:HTSI) stock-shoppers pay, and less than a third of the price of a share of Fresh Market.

Now as I just mentioned, both Harris Teeter Supermarkets Inc (NYSE:HTSI) and The Fresh Market Inc (NASDAQ:TFM) are growing faster than Kroger. Analysts have The Kroger Co. (NYSE:KR) pegged for a bit more than 7% annual earnings growth over the next five years, while Harris is expected to grow a bit less than twice as fast, and Fresh Market a bit less than three times as fast. Emphasis on “a bit less” — as in, the disparities in growth rates aren’t big enough to justify the discounts on The Kroger Co. (NYSE:KR) stock: about two times versus Harris, and more than three times versus The Fresh Market Inc (NASDAQ:TFM).

Kroger’s a proven performer
It’s worth bearing in mind, too, that projections of future growth are really just guesses — and investors may be better advised to invest their money in facts. Over the past five years, Kroger has grown its profits at a very respectable 9.6% clip. So even if Harris Teeter Supermarkets Inc (NYSE:HTSI) might grow faster than The Kroger Co. (NYSE:KR) in the future, we know for a fact that its historic 4% earnings growth rate hasn’t measured up to Kroger’s. Similarly, analysts who hope to see Fresh Market outgrow Kroger by a factor of three in future years must admit that, so far, it hasn’t even been able to double Kroger’s growth rate.