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1. Company Snapshot

1.a. Company Description

Albertsons Companies, Inc., through its subsidiaries, engages in the operation of food and drug stores in the United States.The company's food and drug retail stores offer grocery products, general merchandise, health and beauty care products, pharmacy, fuel, and other items and services.It also manufactures and processes food products for sale in stores.


As of February 26, 2022, it operated 2,276 stores under various banners, including Albertsons, Safeway, Vons, Pavilions, Randalls, Tom Thumb, Carrs, Jewel-Osco, Acme, Shaw's, Star Market, United Supermarkets, Market Street, Haggen, Kings Food Markets, and Balducci's Food Lovers Market; and 1,722 pharmacies, 1,317 in-store branded coffee shops, 402 adjacent fuel centers, 22 distribution centers, and 20 manufacturing facilities, as well as various digital platforms.The company was founded in 1860 and is headquartered in Boise, Idaho.

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1.b. Last Insights on ACI

Albertsons Companies' recent performance was negatively impacted by various factors. Despite robust Q2 2025 results, including beating revenue and adjusted EPS expectations, the company's growth prospects are being closely watched. The management's decision to expand its share buyback program by $750 million signals confidence in the company's future. Additionally, the company's pharmacy and digital strength drove momentum, leading to a raised FY25 identical-sales growth outlook. However, concerns surrounding the company's ability to sustain growth and maintain profitability may be affecting its performance. (Source: Albertsons Companies Surges As The Market Finally Wakes Up To Its Potential)

1.c. Company Highlights

2. Albertsons Companies Posts Solid Q2 Results, Raises 2025 Outlook

Albertsons Companies, Inc. reported a strong second quarter, with adjusted EBITDA of $848 million and earnings per share of $0.44, beating analyst estimates of $0.39. Identical sales grew 2.2%, driven by a 23% increase in digital sales and strong growth in pharmacy. Gross margin was 27%, with a 63 basis point decrease versus last year, primarily due to the mix shift toward digital and pharmacy. The company's net debt to adjusted EBITDA ratio will be 2.2x after the accelerated share repurchase, still within a range that provides significant operational flexibility.

Publication Date: Oct -16

📋 Highlights
  • Strong Financial Performance:: Albertsons reported 2.2% adjusted ID sales growth, $848M adjusted EBITDA, and $0.44 EPS, with pharmacy sales driving 23% digital sales growth.
  • Capital Allocation Moves:: $750M accelerated share repurchase (8% of shares) and $2.75B share buyback authorization, boosting 2025 adjusted EPS guidance to $2.06-$2.19.
  • E-commerce Expansion:: 24% CAGR e-commerce growth, nearing breakeven, supported by store fulfillment and tech-driven optimizations like AI-optimized picking paths.
  • Pharmacy & Health Momentum:: GLP-1s and core script growth drove pharmacy market share gains, with Q3 comp growth projected higher than Q4 due to vaccine timing and share gains.
  • Strategic Technology & Productivity:: AI integration across operations reduced shrink and improved efficiency, while SG&A expenses dropped 50 bps YoY, enabling 2.2x net debt/EBITDA post-repurchases.

Operational Highlights

The company highlighted its strengths, including its $14.3 billion portfolio of owned real estate, e-commerce growth at a 24% compounded annual growth rate, and a unified national network powered by common systems. CEO Susan Morris emphasized the company's focus on driving growth and engagement through digital connection, growing its media collective, enhancing the customer value proposition, modernizing capabilities through technology, and driving transformational productivity.

Capital Allocation and Share Repurchase

The company announced a $750 million accelerated share repurchase, representing an incremental 8% of outstanding shares, reflecting its conviction that its share price is underappreciated. CFO Sharon McCollam discussed capital allocation actions, including increasing the share repurchase authorization from $2 billion to $2.75 billion.

2025 Outlook and Growth Prospects

The company updated its 2025 financial outlook, increasing the lower end of its identical sales range to 2.2-2.75%, and reiterating its adjusted EBITDA range of $3.8-3.9 billion. The company increased its adjusted EPS range to $2.06-$2.19, reflecting the accretion of the $750 million accelerated share repurchase. With a current P/E Ratio of 11.15 and EV/EBITDA of 6.59, the market appears to be pricing in moderate growth expectations.

Strategic Priorities and Future Plans

The company is focused on five strategic priorities: customer growth, customer experience, digital growth, media collective, and health and pharmacy. These investments are expected to enhance the customer value proposition and drive growth in digital and pharmacy. The company expects to inflect to modestly positive food volume growth in 2026, driven by pharmacy growth and e-commerce getting closer to breakeven, with analysts estimating next year's revenue growth at 4.2%.

3. NewsRoom

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Albertsons® Companies Accelerates Digital Transformation with the Albertsons AI Shopping Assistant, Redefining the Grocery Shopping Experience

Dec -03

Source: businesswire.com

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Friendly Fraud Expected to Increase by 25% Between Thanksgiving and Cyber Monday, Warns ACI Worldwide

Nov -25

Source: businesswire.com

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ACI Worldwide to Discuss Payments Modernization and Fraud Trends at Three Investor Conferences

Nov -17

Source: businesswire.com

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Albertsons Companies, Inc. $ACI Shares Bought by Envestnet Asset Management Inc.

Nov -17

Source: defenseworld.net

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Critical Contrast: Albertsons Companies (NYSE:ACI) versus National Vision (NASDAQ:EYE)

Nov -17

Source: defenseworld.net

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Mason Hawkins' Strategic Moves: Rayonier Inc. Takes Center Stage with 6.09% Portfolio Share

Nov -14

Source: gurufocus.com

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Albertsons® Companies Drives Rewards Beyond the Grocery Aisle with Uber One® Perks for All Loyalty Members, No Paid Subscription Required

Nov -12

Source: businesswire.com

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ACI Worldwide, Inc. Earns Best in Class in Javelin Strategy & Research's 2025 Know Your Customer and Know Your Business Solution Scorecard

Nov -11

Source: globenewswire.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (1.80%)

6. Segments

Non-perishables

Expected Growth: 1.8%

Albertsons Companies, Inc.'s non-perishables segment growth of 1.8% is driven by increasing demand for convenient and shelf-stable products, private label expansion, and strategic pricing. Additionally, the company's focus on e-commerce and omnichannel capabilities, as well as its efforts to optimize supply chain and logistics, contribute to the segment's growth.

Fresh

Expected Growth: 1.9%

Fresh from Albertsons Companies, Inc. growth of 1.9% is driven by increasing demand for online grocery shopping, strategic investments in digital capabilities, and expansion of same-day delivery services. Additionally, the company's focus on private label offerings, loyalty programs, and targeted marketing efforts contribute to its growth momentum.

Pharmacy

Expected Growth: 1.7%

Albertsons Companies, Inc.'s pharmacy segment growth of 1.7% is driven by increasing demand for specialty medications, expansion of Medicare and Medicaid programs, and strategic partnerships with healthcare providers. Additionally, the company's focus on immunizations, health clinics, and patient engagement programs contributes to the growth.

Fuel

Expected Growth: 1.5%

Albertsons Companies, Inc.'s 1.5% fuel growth is driven by increasing same-store sales, strategic pricing, and operational efficiencies. Additionally, the company's focus on private label offerings, loyalty programs, and convenient services such as curbside pickup and delivery contribute to the growth.

Other

Expected Growth: 1.6%

Albertsons' 1.6% growth in 'Other' segment is driven by increased sales in its pharmacy and clinic businesses, as well as growth in its online shopping and curbside pickup services. Additionally, the company's focus on private label products and cost savings initiatives have contributed to the segment's growth.

7. Detailed Products

Grocery Products

Albertsons Companies, Inc. offers a wide range of grocery products, including fresh produce, meat, dairy, bakery, and packaged goods.

Pharmacy Services

The company operates pharmacies within its stores, offering prescription filling, immunizations, and health clinics.

Floral and Gift Services

Albertsons Companies, Inc. offers floral arrangements, bouquets, and gift items for special occasions.

Liquor and Wine

The company operates liquor and wine departments within its stores, offering a selection of beer, wine, and spirits.

Delicatessen and Prepared Foods

Albertsons Companies, Inc. offers a variety of prepared foods, including sandwiches, salads, and hot foods.

Bakery and Coffee Services

The company operates in-store bakeries and coffee shops, offering fresh-baked goods and specialty coffee drinks.

Online Grocery Shopping and Delivery

Albertsons Companies, Inc. offers online grocery shopping with delivery or curbside pickup options.

8. Albertsons Companies, Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

Albertsons Companies, Inc. operates in a highly competitive grocery market, with many substitutes available to customers. However, the company's strong brand recognition and loyalty programs help to mitigate the threat of substitutes.

Bargaining Power Of Customers

Albertsons Companies, Inc. has a large customer base, but customers have significant bargaining power due to the availability of substitutes and the ease of switching to competitors.

Bargaining Power Of Suppliers

Albertsons Companies, Inc. has a diverse supplier base, and suppliers have limited bargaining power due to the company's large scale and purchasing power.

Threat Of New Entrants

The grocery market has high barriers to entry, including significant capital requirements and complex logistics. This limits the threat of new entrants to Albertsons Companies, Inc.

Intensity Of Rivalry

The grocery market is highly competitive, with many established players competing for market share. Albertsons Companies, Inc. faces intense rivalry from competitors such as Walmart, Kroger, and Costco.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 0.00%
Debt Cost 3.95%
Equity Weight 100.00%
Equity Cost 6.50%
WACC 6.50%
Leverage 0.00%

11. Quality Control: Albertsons Companies, Inc. passed 1 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

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Cal-Maine Foods

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Value: 8.1

Growth: 9.4

Quality: 8.1

Yield: 10.0

Momentum: 6.5

Volatility: 5.3

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Village Super Market

A-Score: 6.7/10

Value: 7.4

Growth: 4.9

Quality: 4.7

Yield: 7.0

Momentum: 8.5

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Laureate Education

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Value: 3.9

Growth: 5.6

Quality: 7.1

Yield: 5.0

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Ingredion

A-Score: 6.5/10

Value: 6.8

Growth: 6.6

Quality: 5.9

Yield: 6.0

Momentum: 3.5

Volatility: 10.0

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Albertsons

A-Score: 6.0/10

Value: 7.2

Growth: 5.4

Quality: 3.5

Yield: 8.0

Momentum: 3.5

Volatility: 8.3

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A-Score: 4.5/10

Value: 4.8

Growth: 8.1

Quality: 5.5

Yield: 0.0

Momentum: 4.0

Volatility: 4.7

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

17.22$

Current Price

17.22$

Potential

-0.00%

Expected Cash-Flows