Albertsons
ACI
$12.08
+1.94%
Albertsons Companies, Inc. is a leading food and drug retailer in the United States, operating a vast network of stores under well-known banners such as Albertsons, Safeway, Vons, and Jewel-Osco. As one of the largest supermarket chains in the country, it holds a significant market position in the grocery industry, competing with other major players like Kroger and Walmart. The current investor narrative centers on the company's strategic initiatives to enhance operational efficiency and digital capabilities, while also navigating a challenging competitive landscape and recent stock price volatility. The company's recent financial performance has shown modest revenue growth, but profitability has been under pressure, leading to a sharp decline in its stock price over the past year.…
ACI
Albertsons
$12.08
Related headlines
Investment Opinion: Should I buy ACI Today?
Based on the analysis, I rate Albertsons as a Hold. The stock is trading at a forward PE of 6.18x, which is a significant discount to the industry average, and the average analyst target price of $14.50 implies a 25.2% upside. However, the company faces significant challenges, including declining margins, high leverage, and intense competition, which warrant a cautious stance. The consensus recommendation is 'hold', with a mean score of 2.63, reflecting a neutral sentiment among analysts.
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ACI 12-Month Price Forecast
The AI assessment is neutral, reflecting the balance between the stock's deep valuation discount and its fundamental challenges. The forward PE suggests the market expects a significant earnings recovery, but the company's margin trends and competitive pressures cast doubt on this expectation. The stock's low beta and strong free cash flow provide some downside support, but the lack of clear catalysts for growth keeps the stance neutral. If the company demonstrates margin stabilization and revenue acceleration, the stance would be upgraded to bullish. Conversely, if margins continue to decline or revenue growth turns negative, the stance would be downgraded to bearish.
Wall Street consensus
Most Wall Street analysts maintain a constructive view on Albertsons's 12-month outlook, with a consensus price target around $14.50 and implied upside of +20.0% versus the current price.
Average Target
$14.50
0 analysts
Implied Upside
+20.0%
vs. current price
Analyst Count
—
covering this stock
Price Range
$10 - $24
Analyst target range
Albertsons is covered by 16 analysts, with a consensus recommendation of 'hold' and a mean recommendation score of 2.63 (where 1 is strong buy and 5 is sell). The average target price is $14.50, implying an upside of approximately 25.2% from the current price of $11.58. The distribution of ratings is not provided, but the 'hold' consensus suggests a neutral stance, with some analysts seeing value at current levels. The target price range spans from a low of $10.00 to a high of $24.00, indicating a wide dispersion in expectations. The low target of $10.00 suggests that some analysts see further downside, potentially due to competitive pressures or margin erosion, while the high target of $24.00 implies a significant recovery scenario, possibly driven by successful execution of its strategic plan. Recent ratings actions show a mix of views, with Morgan Stanley downgrading to Underweight in January 2026, while JP Morgan, UBS, and Wells Fargo maintained or reiterated Overweight/Buy ratings, reflecting divergent opinions on the stock's prospects.
Bulls vs Bears: ACI Investment Factors
Albertsons presents a mixed picture: the stock is trading at a deep discount on forward earnings, with a consensus analyst target implying 25% upside, and the company generates strong free cash flow. However, the stock has been in a severe downtrend, with declining margins, high leverage, and decelerating revenue growth. The bull case hinges on the company's ability to execute its strategic plan and achieve the earnings recovery implied by the forward PE, while the bear case focuses on competitive pressures and margin erosion. Currently, the bearish evidence is stronger given the stock's persistent decline and fundamental headwinds, but the valuation discount offers a potential value opportunity if the company can stabilize its operations. The most critical tension is whether the company can reverse its margin decline and achieve the earnings growth that the forward PE suggests, as this would determine the stock's trajectory.
Bullish
- Forward PE at 6.18x is deeply discounted: The forward PE of 6.18x is significantly below the industry average and historical range of 5x-18x, suggesting the market is pricing in a pessimistic scenario. If the company achieves its estimated EPS of $1.67, the stock offers substantial upside potential.
- Analyst target implies 25% upside: The average analyst target price of $14.50 represents a 25.2% upside from the current price of $11.58. Even the low target of $10.00 is only 13.6% below current levels, indicating limited downside risk from a consensus perspective.
- Strong free cash flow generation: Albertsons generated $2.08 billion in trailing twelve-month free cash flow, providing ample capacity for debt reduction, dividends, and share buybacks. This cash flow supports the company's ability to service its debt and return capital to shareholders.
- Low beta offers defensive characteristics: With a beta of 0.25, the stock is significantly less volatile than the market, making it a defensive play in uncertain times. This low correlation to market movements can provide portfolio stability, though it has not shielded the stock from its own company-specific decline.
Bearish
- Stock down 39.75% in one year: The stock has declined 39.75% over the past year, dramatically underperforming the S&P 500's +18.19% gain. This severe underperformance reflects investor concerns about the company's growth prospects and competitive position.
- High debt-to-equity ratio of 8.33: The debt-to-equity ratio of 8.33 indicates a highly leveraged balance sheet, which increases financial risk. High interest expenses of $116 million in Q3 alone consume a significant portion of operating income, limiting flexibility.
- Declining gross and operating margins: Gross margin contracted to 27.45% in Q3 from 27.99% a year ago, and operating margin fell to 2.56% from 2.76%. This margin pressure reflects intense competition and rising costs, which could persist and erode profitability further.
- Revenue growth decelerating to 1.86%: Q3 revenue growth of 1.86% YoY is modest and decelerating from earlier quarters, indicating a mature and competitive market. The company's inability to accelerate top-line growth limits its ability to offset cost pressures.
ACI Technical Analysis
Albertsons' stock is in a pronounced downtrend, with a 1-year price change of -39.75%, significantly underperforming the S&P 500's +18.19% gain. The current price of $11.58 sits near the lower end of its 52-week range, at approximately 12% above the 52-week low of $10.86 and 42% below the 52-week high of $20.02. This positioning suggests that the stock is trading near its lows, which could indicate a potential value opportunity or a falling knife, depending on the fundamental outlook. The stock's beta of 0.25 indicates it is significantly less volatile than the broader market, but this low beta has not shielded it from a severe decline.
Beta
0.19
0.19x market volatility
Max Drawdown
-51.5%
Largest decline past year
52-Week Range
$11-$20
Price range past year
Annual Return
-38.3%
Cumulative gain past year
| Period | ACI Return | S&P 500 |
|---|---|---|
| 1m | -14.6% | +2.8% |
| 3m | -24.6% | +4.2% |
| 6m | -33.2% | +11.3% |
| 1y | -38.3% | +21.5% |
| ytd | -30.2% | +12.7% |
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ACI Fundamental Analysis
In the most recent quarter (Q3 FY2025, ending November 29, 2025), Albertsons reported revenue of $19.12 billion, a modest 1.86% year-over-year increase. This growth is decelerating compared to earlier quarters, with Q1 FY2025 revenue of $24.88 billion (which included a 53-week year) and Q2 FY2025 revenue of $18.92 billion. The company's net income for Q3 was $293.3 million, a significant improvement from the $168.5 million in Q2, but still below the $400.6 million reported in the same quarter last year. Gross margin for Q3 was 27.45%, slightly down from 27.99% in the year-ago quarter, indicating ongoing margin pressure in the competitive grocery sector. Operating margin also contracted to 2.56% from 2.76% a year earlier, reflecting higher operating expenses and investments in digital initiatives.
Quarterly Revenue
$19.1B
2025-11
Revenue YoY Growth
+1.9%
YoY Comparison
Gross Margin
27.5%
Latest Quarter
Free Cash Flow
$2.1B
Last 12 Months
Revenue & Net Income Trends (2 Years)
Revenue Breakdown
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Valuation Analysis: Is ACI Overvalued?
Given that Albertsons has positive net income, the primary valuation metric selected is the price-to-earnings (PE) ratio. The trailing PE ratio stands at 44.75x, while the forward PE ratio is much lower at 6.18x. This wide gap implies that the market expects a significant earnings recovery in the near term, likely driven by cost savings and operational improvements. However, the trailing PE is elevated due to depressed earnings over the past year, making the forward PE a more meaningful indicator of value. Compared to the industry average, Albertsons' forward PE of 6.18x is at a substantial discount, suggesting the stock is undervalued relative to peers, but this discount may reflect the market's skepticism about the company's ability to achieve its earnings targets. Historically, the stock has traded at a PE range of roughly 5x to 18x over the past few years, with the current forward PE near the lower end of that range, indicating that the market is pricing in a pessimistic scenario.
PE
44.7x
Latest Quarter
vs. Historical
High-End
5-Year PE Range 5x~18x
vs. Industry Avg
N/A
Industry PE ~N/A*
EV/EBITDA
7.3x
Enterprise Value Multiple
Investment Risk Disclosure
Financial and operational risks are significant for Albertsons. The company's debt-to-equity ratio of 8.33 indicates a highly leveraged balance sheet, with interest expenses of $116 million in Q3 alone consuming a substantial portion of operating income. This leverage increases vulnerability to rising interest rates and limits financial flexibility. Additionally, gross and operating margins have been contracting, with gross margin down to 27.45% from 27.99% a year ago, reflecting intense competition and cost pressures. The company's revenue growth is decelerating to just 1.86% YoY, which may not be sufficient to offset rising costs and maintain profitability. Furthermore, the trailing PE of 44.75x is elevated due to depressed earnings, making the stock sensitive to any disappointment in earnings recovery.
FAQ
The key risks of holding ACI include financial risk from high leverage, with a debt-to-equity ratio of 8.33, which increases vulnerability to interest rate hikes. Competitive risk is also significant, as the grocery industry is intensely competitive, with players like Kroger and Walmart pressuring margins. Macroeconomic risk includes a potential downturn that could reduce consumer spending on groceries. Company-specific risks include the failure to achieve earnings estimates, which could lead to further de-rating. The stock's beta of 0.25 indicates low market correlation, but it has not protected investors from a 39.75% decline over the past year.
The 12-month forecast for ACI is mixed, with a base case probability of 50% targeting a range of $13 to $16, aligning with the average analyst target of $14.50. The bull case, with a 25% probability, targets $18 to $24, driven by successful execution of strategic initiatives. The bear case, also with a 25% probability, targets $10 to $12, reflecting continued margin erosion and competitive pressures. The most likely scenario is the base case, which assumes modest revenue growth and stable margins. Investors should monitor the company's ability to achieve its earnings estimates and stabilize margins.
ACI appears undervalued based on forward earnings, with a forward PE of 6.18x compared to the industry average. However, the trailing PE of 44.75x is elevated due to depressed earnings, indicating that the market is pricing in a significant earnings recovery. The stock's price-to-sales ratio of 0.12x is also low, suggesting the market is not paying a premium for revenue. Historically, the stock has traded at a PE range of 5x to 18x, and the current forward PE is near the lower end, indicating undervaluation. The market's skepticism is reflected in the low multiple, but if the company achieves its earnings estimates, the stock could be significantly undervalued.
ACI is a stock with a deep valuation discount, trading at a forward PE of 6.18x, which is significantly below the industry average. The average analyst target price of $14.50 implies a 25.2% upside from the current price of $11.58, suggesting potential for gains. However, the stock has been in a severe downtrend, declining 39.75% over the past year, and faces significant challenges such as declining margins and high debt. For investors with a high risk tolerance and a long-term horizon, the stock could be a value play, but it is not without risks. It may be a good buy for those who believe the company can execute its turnaround plan, but it is not suitable for risk-averse investors.
ACI is more suitable for long-term investment due to its low beta of 0.25, which indicates lower volatility, and its defensive nature as a grocery retailer. The company generates strong free cash flow and pays a dividend yield of 3.31%, providing income potential. However, the stock is currently in a downtrend, and short-term trading could be risky given the negative momentum. For long-term investors, the deep valuation discount and potential for earnings recovery could offer significant upside, but a minimum holding period of 3-5 years is recommended to allow the company to execute its turnaround plan. Short-term traders may find opportunities in oversold bounces, but the overall trend is bearish.