Using an unlevered Free Cash Flow to Firm (FCFF) model, we project The Kroger Co.'s cash flows over 5 years with line-by-line expense modeling. Revenue is projected revenue growing from 1.7% to 3.3% annually, with expenses (COGS, SG&A, R&D) held at historical ratios. Depreciation is computed from a vintage matrix based on a 5-year useful life. Working capital is modeled using historical turnover days (DSO 5, DPO 31, DIO 23). At a 5.6% WACC with mid-year discounting, the terminal value (77% of enterprise value) is derived by applying the industry peer median EV/EBITDA multiple of 12.8x to Year 6 EBITDA. After subtracting net debt, the equity value implies a fair price of $597.22 per share, suggesting KR is undervalued by 734.1% at the current price of $71.60.
Adjust parameters to explore scenarios. Changes are for exploration only and do not affect saved valuations.
| 2026 | 2027 | 2028 | 2029 | 2030 | Terminal | |
|---|---|---|---|---|---|---|
| Profit Before Tax | 25,671 | 25,515 | 26,136 | 26,834 | 27,714 | 28,407 |
| (−) Net Interest | 550 | 547 | 560 | 575 | 594 | 609 |
| (+) D&A | 3,494 | 3,687 | 3,782 | 3,730 | 3,675 | 3,767 |
| EBITDA | 29,715 | 29,749 | 30,478 | 31,140 | 31,983 | 32,783 |
| (−) Tax | 5,109 | 5,078 | 5,201 | 5,340 | 5,515 | — |
| (−) CapEx | 3,579 | 3,557 | 3,644 | 3,741 | 3,864 | — |
| (−) ΔWC | 890 | 3 | -12 | -14 | -18 | — |
| Free Cash Flow (FCF) | 20,137 | 21,110 | 21,646 | 22,072 | 22,622 | — |
| Peers' EBITDA Multiple | 12.8x | |||||
| Terminal Value | 417,980 | |||||
| WACC / Discount Rate | 5.57% | |||||
| Timing of FCF (mid year) | 0.5 | 1.5 | 2.5 | 3.5 | 4.5 | 5 |
| Present Value of FCF | 19,598 | 19,461 | 18,901 | 18,256 | 17,722 | 318,690 |
| Enterprise Value | 412,628 | |||||
| Projection Period | 93,938 | 22.8% | ||||
| Terminal Value | 318,690 | 77.2% | ||||
| (−) Current Net Debt | 21,346 | |||||
| Equity Value | 391,282 | |||||
| (÷) Outstanding Shares | 655M | |||||
| Fair Price | $597 | +734.3% | ||||
| WACC \ EV/EBITDA Exit Multiple | 8.7x | 10.7x | 12.7x | 14.7x | 16.7x |
|---|---|---|---|---|---|
| 3.6% | $485 | $569 | $653 | $737 | $821 |
| 4.6% | $464 | $544 | $624 | $704 | $784 |
| 5.6% | $445 | $521 | $597 | $674 | $750 |
| 6.6% | $426 | $499 | $572 | $644 | $717 |
| 7.6% | $408 | $478 | $547 | $617 | $686 |
Current price: $71.60. Green = undervalued, Red = overvalued.
Based on default parameters
This is an unlevered Free Cash Flow to Firm (FCFF) model with a 5-year projection period. Revenue, expenses, D&A, and working capital are projected using the same line-by-line approach as the Growth Exit models. The key difference is the terminal value methodology: instead of assuming perpetual cash flow growth, the terminal value is calculated by applying the industry peer median EV/EBITDA multiple to the projected Year 6 EBITDA.
Using a peer exit multiple anchors the terminal value to how the market currently prices comparable companies, rather than relying on a theoretical perpetual growth assumption. This approach captures relative valuation dynamics and is particularly useful when a company is expected to converge toward industry-average profitability over time. The sensitivity matrix shows how fair value changes across different WACC and EV/EBITDA multiple scenarios.