Albertsons
ACI
$12.14
-3.27%
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, among others. As one of the largest supermarket chains in the country, it holds a significant market position in the grocery industry, competing with national 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. Attention is also focused on the company's ability to sustain growth amid changing consumer behaviors and potential industry consolidation.…
ACI
Albertsons
$12.14
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Investment Opinion: Should I buy ACI Today?
Based on the analysis, Albertsons is rated a Hold. The consensus analyst recommendation is 'hold' with an average target price of $14.19, implying a 13% upside from the current price of $12.55. The thesis is that the stock is fairly valued given the mixed fundamentals, with potential for upside if operational improvements materialize but significant risks from high leverage and margin pressure.
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ACI 12-Month Price Forecast
The AI assessment is neutral with medium confidence. Albertsons offers a compelling forward valuation, but the company's sluggish growth and high leverage temper enthusiasm. The stock appears fairly valued around $12.55, with a slight upward bias if earnings recover as expected. Key factors to watch include margin trends, debt reduction progress, and the ability to sustain revenue growth. An upgrade to bullish would require evidence of accelerating growth and margin expansion, while a downgrade to bearish would follow further margin erosion or a disappointing earnings report.
Wall Street consensus
Most Wall Street analysts maintain a constructive view on Albertsons's 12-month outlook, with a consensus price target around $14.19 and implied upside of +16.9% versus the current price.
Average Target
$14.19
0 analysts
Implied Upside
+16.9%
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 rating of 2.63 (where 1 is strong buy and 5 is sell). The average target price is $14.19, implying an upside of approximately 13% from the current price of $12.55. The distribution of ratings is not provided, but the recommendation mean suggests a neutral stance, with some analysts seeing value and others cautious. The target price range is wide, from a low of $10.00 to a high of $24.00, indicating significant uncertainty about the company's future prospects. The high target of $24.00 assumes a successful turnaround and multiple expansion, while the low target of $10.00 reflects concerns about competitive pressures and margin erosion. Recent ratings actions show a mix of upgrades and downgrades, with Morgan Stanley downgrading to Underweight in January 2026, while JP Morgan and UBS maintain Overweight/Buy ratings, suggesting a lack of clear consensus among institutional investors.
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Bulls vs Bears: ACI Investment Factors
Albertsons presents a classic value trap versus deep value opportunity debate. On the bearish side, the trailing PE of 44.75x, sluggish revenue growth of 1.86%, and high debt-to-equity of 8.33 paint a picture of a struggling retailer. However, the forward PE of 6.79x and analyst target upside of 13% suggest that the market is pricing in a significant earnings recovery. The most critical tension is whether the company can achieve the earnings rebound implied by forward estimates, driven by cost-saving initiatives and operational efficiency. If it does, the stock is deeply undervalued; if not, the current valuation could prove unsustainable. Currently, the bearish evidence is stronger given the lack of clear catalysts and persistent margin pressure, but the low forward multiple offers a margin of safety for patient investors.
Bullish
- Forward PE at 6.79x signals deep value: The forward PE of 6.79x is a 69% discount to the industry average of 22x, suggesting the market expects a sharp earnings recovery. If Albertsons delivers on consensus EPS estimates of $1.67 for the next fiscal year, the stock is priced at a significant bargain relative to its grocery peers.
- Analyst average target implies 13% upside: With an average analyst target of $14.19 versus the current price of $12.55, there is a clear 13% upside potential. The high target of $24.00 reflects a scenario where operational improvements and multiple expansion materialize, offering substantial reward for patient investors.
- 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 generation supports the current dividend yield of 3.31% and offers a cushion against operational headwinds.
- Low beta provides defensive stability: With a beta of 0.188, Albertsons is significantly less volatile than the broader market, making it a defensive holding in uncertain economic times. This low correlation to market swings can protect investors during downturns, as grocery demand remains relatively inelastic.
Bearish
- Trailing PE of 44.75x is extremely expensive: The trailing PE of 44.75x is a 103% premium to the industry average of 22x, reflecting depressed earnings over the past year. If earnings do not recover as expected, the stock could face significant de-rating, as the current multiple is unsustainable for a mature grocery retailer.
- Revenue growth is sluggish at 1.86%: Q3 FY2025 revenue grew only 1.86% year-over-year to $19.12 billion, highlighting the mature and competitive nature of the grocery industry. This slow growth limits the company's ability to drive organic expansion and may justify a lower valuation multiple.
- Gross margin contracted to 27.45%: Gross margin fell from 27.94% in Q3 FY2024 to 27.45% in Q3 FY2025, indicating competitive pressures and promotional activity. This margin erosion, if sustained, could compress profitability and undermine the earnings recovery thesis.
- High debt-to-equity ratio of 8.33: Albertsons carries a debt-to-equity ratio of 8.33, reflecting substantial leverage from its LBO history. This high leverage increases financial risk, especially if interest rates remain elevated, and could limit financial flexibility.
ACI Technical Analysis
Albertsons' stock has been in a pronounced downtrend over the past year, with a 1-year price change of -34.29%, significantly underperforming the S&P 500's +18.65% gain. The current price of $12.55 sits at approximately 18% above the 52-week low of $10.86 and 37% below the 52-week high of $20.00, indicating that the stock is trading in the lower quartile of its 52-week range. This positioning suggests that the market has priced in considerable pessimism, but it also raises the question of whether the stock is a value opportunity or a falling knife, especially given the persistent negative momentum.
Beta
0.20
0.20x market volatility
Max Drawdown
-44.5%
Largest decline past year
52-Week Range
$11-$20
Price range past year
Annual Return
-36.9%
Cumulative gain past year
| Period | ACI Return | S&P 500 |
|---|---|---|
| 1m | +1.1% | -0.9% |
| 3m | -20.5% | +5.6% |
| 6m | -28.0% | +15.0% |
| 1y | -36.9% | +18.1% |
| ytd | -29.9% | +12.3% |
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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, reflecting a mature and slow-growth industry. Over the past several quarters, revenue growth has been inconsistent, with Q1 FY2025 showing a 2.5% increase, Q2 a 1.9% increase, and Q4 FY2024 a 2.5% increase, indicating a stable but unexciting trajectory. The company's gross margin for the quarter was 27.45%, slightly down from 27.94% in the same period last year, suggesting competitive pressures and promotional activity. Net income for the quarter was $293 million, a significant improvement from $168 million in Q2, but down from $400 million in Q3 of the prior year, highlighting earnings volatility. The net margin of 1.53% is thin, typical for grocery retailers, but the company has been able to maintain profitability, with an operating margin of 2.56% in the latest quarter.
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 is profitable, the price-to-earnings (PE) ratio is the primary valuation metric. The trailing PE stands at 44.75x, while the forward PE is much lower at 6.79x, indicating that the market expects a substantial earnings recovery in the next fiscal year. This wide gap suggests that the market is pricing in a significant improvement in profitability, possibly driven by cost-saving initiatives or a normalization of operations. Compared to the industry average PE of 22x (as per valuation data), Albertsons' trailing PE is at a 103% premium, but its forward PE is at a 69% discount, reflecting the market's anticipation of a sharp earnings rebound. Historically, the stock has traded at a PE range of 5x to 18x over the past three years, with the current trailing PE near the top of that range, but the forward PE near the bottom, indicating that the market is forward-looking and expects a normalization of earnings. The PEG ratio is negative at -0.59, which is unusual and suggests that earnings growth is expected to be negative in the near term, but this may be due to the cyclicality of the grocery business.
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 substantial. Albertsons' high debt-to-equity ratio of 8.33 indicates significant leverage, which amplifies vulnerability to rising interest rates and economic downturns. The company's net margin of 1.53% is razor-thin, leaving little room for error in cost management or unexpected expenses. Revenue growth of just 1.86% year-over-year highlights a mature business with limited organic expansion prospects, while gross margin contraction from 27.94% to 27.45% suggests competitive pressures that could further erode profitability. Additionally, the trailing PE of 44.75x is unsustainable if earnings do not recover, posing a risk of multiple compression.
FAQ
The primary risks include financial leverage, competitive pressures, and macroeconomic factors. Albertsons' debt-to-equity ratio of 8.33 is extremely high, making it vulnerable to interest rate hikes and economic downturns. The grocery industry is highly competitive, with players like Walmart and Kroger pressuring margins, as evidenced by the gross margin decline to 27.45%. Additionally, the stock's beta of 0.188 is low, but it has underperformed the market significantly, indicating company-specific issues. Regulatory risks, such as failed merger attempts, could also impact strategic direction.
The 12-month forecast for Albertsons is mixed, with a base case target of $13-$15, reflecting the analyst average of $14.19. The bull case, with a 25% probability, targets $18-$24 if the company successfully executes its turnaround and earnings recover sharply. The bear case, also with a 25% probability, targets $9-$11 if competitive pressures and margin erosion continue. The most likely scenario is the base case, where the stock trades around $14, assuming revenue growth of 2% and EPS of $1.67. Investors should monitor quarterly earnings for signs of margin stabilization or deterioration.
Albertsons appears undervalued on a forward basis but overvalued on a trailing basis. The forward PE of 6.79x is well below the industry average of 22x, suggesting the market expects a substantial earnings rebound. Conversely, the trailing PE of 44.75x is a 103% premium to the industry, reflecting the depressed earnings of the past year. The stock's price-to-sales ratio of 0.12x is also low, indicating that the market is pricing in minimal growth. Overall, the valuation is attractive if earnings recover as expected, but the market is not paying a premium for current performance.
Albertsons is a reasonable buy for investors with a long-term horizon and a tolerance for near-term volatility. The stock trades at a forward PE of 6.79x, which is a 69% discount to the industry average, and offers a 13% upside to the average analyst target of $14.19. However, the trailing PE of 44.75x and high debt-to-equity of 8.33 highlight significant risks. For value investors who believe in the earnings recovery story, the stock offers a favorable risk/reward, but for those seeking growth or stability, other options may be more suitable.
Albertsons is more suitable for long-term investment due to its low beta of 0.188, which provides stability, and its dividend yield of 3.31%, which rewards patient holders. The stock's growth prospects are limited, with revenue growth of only 1.86%, making it less attractive for short-term traders seeking momentum. The high debt load and thin margins require time for operational improvements to materialize, so a minimum holding period of 3-5 years is recommended. Short-term trading is possible, but the stock's volatility and negative momentum over the past year make it risky for quick gains.