Albertsons Companies, Inc.

Based on a comprehensive analysis of ACI, here is an assessment of whether it is worth buying.

Technical Analysis ACI shows tentative signs of stabilization after a significant decline, trading closer to its 52-week low than its high. The recent one-month gain is encouraging but has not yet reversed the longer-term weak trend, as evidenced by its underperformance against the market. Its very low beta suggests it may offer some stability, but the substantial past drawdown indicates vulnerability remains.

Fundamentals & Valuation Fundamentally, ACI demonstrates improving profitability and operational efficiency, with net margins and return on equity showing positive trends. However, this is counterbalanced by a highly leveraged balance sheet and weak liquidity. The valuation presents a mixed picture: its low P/E and exceptionally low PEG ratio suggest deep undervaluation based on earnings growth, but the high EV/EBITDA ratio advises caution.

Risk Assessment & Peer Context The primary risk is financial, stemming from its high debt load, rather than from market volatility, given its low beta. A key limitation is the inability to benchmark its valuation against peers, making it difficult to determine if its attractive multiples are unique or simply reflect broader sector challenges.

Recommendation ACI presents a compelling value opportunity for investors who can tolerate its significant financial leverage. The improving profitability and deeply discounted earnings growth, as indicated by the PEG ratio, are strong positive signals. However, the high debt and lack of peer comparison context make it a higher-risk proposition. It could be considered a speculative buy for investors seeking undervalued turnarounds, but it is unsuitable for risk-averse portfolios.

RockFlow Model Forecast: Three Scenarios for 2026

Based on the comprehensive analysis provided, here is a 12-month outlook for ACI:

The primary catalysts for ACI over the next year are its improving operational efficiency, demonstrated by rising net margins and return on equity, and the potential for its exceptionally low PEG ratio to attract value investors seeking undervalued earnings growth. The key risk remains its highly leveraged balance sheet, which could constrain financial flexibility and amplify losses if profitability falters or financing costs rise. Without a clear analyst target price, the valuation is speculative; however, a successful execution of its turnaround could push the stock toward reclaiming a price in the low-to-mid $20s, while failure to manage its debt could see it retest recent lows nearer to its 52-week low.

Wall Street Consensus

Most Wall Street analysts are optimistic about Albertsons Companies, Inc.'s 12-month outlook, with consensus target around $17.93, indicating expected upside potential.

Overall, ACI has investment potential but also faces challenges. Here are key factors to weigh before investing.

ACI has delivered mixed performance with recent modest gains unable to fully offset longer-term weakness, exhibiting low volatility characteristics relative to the broader market.

The stock has shown recent strength with a 4.61% gain over the past month, though the 3-month performance remains slightly negative at -0.17%. ACI has underperformed the market by 2.02% over this period, indicating relative weakness despite the recent monthly rebound despite its low beta of 0.316 suggesting muted volatility compared to market swings.

Currently trading at $17.93, ACI sits just 13.5% above its 52-week low but remains 22.7% below its yearly high, positioning it nearer to oversold territory than overbought. With a maximum drawdown of -29.77% over the past year, the stock appears to be recovering from significant declines but remains well below its peak valuation levels.

Revenue & Profitability Revenue showed modest growth from $18.9B to $19.1B quarter-over-quarter, while profitability improved significantly with net profit margin expanding from 0.89% to 1.53%. The operating profit margin nearly doubled from 1.56% to 2.56%, indicating better cost control despite SG&A expenses remaining elevated relative to gross profits.

Financial Health ACI maintains a high debt load with a debt-to-equity ratio of 6.17 and total debt to capitalization of 86%, though interest coverage improved to 4.2x in Q3. The company shows weak liquidity with a current ratio below 1 (0.91) and minimal cash reserves, but operating cash flow coverage ratios remain adequate for near-term obligations.

Operational Efficiency Return on equity improved to 11.7% in Q3, supported by reasonable asset turnover of 0.71. The 40-day operating cycle and positive cash conversion cycle of 14 days indicate efficient working capital management, though inventory turnover of 2.5x suggests room for improvement in inventory management efficiency.

Valuation Level: ACI's trailing PE ratio of 10.7 and forward PE of 8.3 suggest the stock trades at a significant earnings discount compared to the broader market. The exceptionally low PEG ratio of 0.10, which is far below 1.0, indicates the stock is substantially undervalued relative to its earnings growth prospects. However, the elevated EV/EBITDA of 22.9 presents a contrasting signal that warrants caution despite the attractive earnings multiples.

Peer Comparison: Due to the unavailability of industry average data, a direct peer comparison cannot be conducted using standardized metrics. The assessment is therefore limited to absolute valuation measures rather than relative positioning within its sector. Investors would need industry benchmarks to properly contextualize whether ACI's valuation multiples represent a sector-wide characteristic or a company-specific opportunity.

Volatility Risk: ACI exhibits very low volatility risk with a beta of 0.316, indicating it is significantly less volatile than the broader market. However, the stock has demonstrated a notable maximum one-year drawdown of -29.77%, suggesting it can still experience substantial price declines during market downturns, highlighting a potential disconnect between its low beta and actual downside capture.

Other Risks: The absence of reported short interest implies minimal speculative pressure or negative investor sentiment against the stock. This alleviates a key risk, but an investor must still consider other factors such as trading liquidity, which is not provided, and fundamental business risks tied to its specific industry sector that could affect price stability.