Albertsons Companies, Inc. (ACI), a leading food and drug retailer, reported solid financial results for the third quarter, which ended November 30, 2024. The company’s identical sales increased 2.0% over the prior year’s period, while its digital sales rose 23%. Also, ACI’s loyalty members increased by 15% to 44.3 million.

As of the date of the quarterly report, ACI operated 2,273 retail food and drug stores, 1,732 pharmacies, 405 associated fuel centers, 22 dedicated distribution centers, and 19 manufacturing facilities. ACI has its stores across 34 states and the District of Columbia under more than 20 brands, including Albertsons, Safeway, Vons, Jewel-Osco, Shaw’s, Acme, Tom Thumb, Randalls, and United Supermarkets.

Also, during fiscal 2024, the company completed 84 remodels, opened nine new stores, and continued investment in its digital and technology platforms.

Albertsons Companies continues to expand its operations and presence through new innovations and introductions. Recently, ACI released an API to enable advertisers to integrate Albertsons Cos. campaign performance data into their own measurement models for analysis. Also, the company introduced the newest Own Brand, Overjoyed and Overjoyed Boutique™.

ACI’s stock performance resonates with its strong operational and financial efficiency. Shares of ACI have gained 5.2% over the past month and 3.2% over the past six months to close its last trading session at $19.95.

Let’s look at factors that could influence ACI’s performance in the upcoming months.

Positive Recent Developments

On January 7, ACI’s retail media arm, Albertsons Media Collective, launched an API to allow advertisers to integrate Albertsons Cos. campaign performance data into their own measurement models for analysis. Albertsons Media Collective also partnered with TransUnion to offer its advertisers TruAudience® marketing mix modeling (MMM) measurement to unlock ease and efficiency.

On September 24, ACI unveiled Bee Lightly, the newest addition to its wine portfolio, distinguished by its unique flat bottle design crafted from 100% recycled polyethylene terephthalate (PET). With the Bee Lightly selection, ACI offers its shoppers quality, affordable wines from France while redefining wine packaging standards.

Also, on September 4, ACI introduced its newest brand, Overjoyed. The brand is designed to inspire and elevate every occasion, offering a well-curated selection of colorful and tasty products, including cupcakes, candles and liners, cookies, chocolatey trail mixes, cheesecakes, and sprinkles.

The extension of Overjoyed, Overjoyed Boutique™, offers decorative vases, candles, and seasonal gifts to make everyday sparkle. The brand announcements marked ACI’s first major private label debut in recent years.

Solid Financials

For the third quarter that ended November 30, 2024, ACI’s net sales and other revenue increased 1.2% from the prior year’s quarter to $18.77 billion, and its operating income for the same period was $518.50 million. Its gross margin totaled $5.25 billion, up 0.9% from the year-ago value.

Furthermore, the company’s net income came in at $400.60 million, up 10.8% from the previous-year period, while its net income per class A common share of $0.69 reflects an increase of 11.3% year-over-year. Also, ACI’s adjusted EBITDA stood at $1.07 billion for the quarter.

The company’s cash and cash equivalents stood at $202.30 million as of November 30, 2024, compared to $188.70 million as of February 24, 2024.

Favorable Analyst Estimates

Analysts expect ACI’s revenue for the fourth quarter (ending February 2025) to come in at $18.78 billion, indicating an increase of 2.4% year-over-year. The company’s consensus EPS estimate is expected to be $0.41 for the same period.

For the fiscal year (ending February 2026), the company’s revenue and EPS are anticipated to grow 2.1% and marginally year-over-year to $82.12 billion and $2.31, respectively.

High Profitability

ACI’s trailing-12-month ROCE of 35.20% is significantly higher than the 10.81% industry average. Its trailing-12-month ROTC of 7.54% is 6.1% higher than the industry average of 7.10%. Likewise, the stock’s trailing-12-month asset turnover ratio of 3.01x is 247.3% higher than the industry average of 0.87x.

Low Valuation

In terms of forward non-GAAP P/E, ACI is currently trading at 8.67x, 45.6% lower than the industry average of 15.94x. Likewise, the stock’s forward EV/Sales and Price/Sales of 0.32x and 0.14x are considerably lower than the industry averages of 1.59x and 1.16x, respectively.

Additionally, the stock’s forward EV/EBITDA and Price/Cash Flow of 6.46x and 4.23x are 39% and 64.4% lower than the industry averages of 10.59x and 11.91x, respectively.

POWR Ratings Reflect Promise

ACI’s solid fundamentals are reflected in its POWR Ratings. The stock has an overall rating of A, translating to a Strong Buy in our proprietary system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.

Our proprietary rating system also evaluates each stock based on eight distinct categories. ACI has an A grade for Value, consistent with its low valuation.

The stock also has a B grade for Quality, which is in sync with its higher profitability relative to its peers.

ACI is ranked #9 among the 36 stocks in the A-rated Grocery/Big Box Retailers industry.

Beyond what I have stated above, we have also given ACI grades for Stability, Growth, Sentiment, and Momentum. Get access to all the ACI ratings here.

Bottom Line

ACI reported solid financial results in the last reported quarter. The company continued to mark strong sales and income growth in the quarter. ACI’s strong market presence and its continuous endeavors to expand in different horizons contribute to its solid industry footing. Further, the company’s long-term prospects appear robust, driven by innovations, portfolio expansion, and financial stability.

Given ACI’s strong financial performance, accelerating profitability, strong market position, and robust growth outlook, it could be wise to invest in this stock.

How Does Albertsons Companies, Inc. (ACI) Stack Up Against Its Peers?

While ACI has an overall POWR Rating of A, investors could also check out these other stocks within the A-rated Grocery/Big Box Retailers industry with A (Strong Buy) or B (Buy) ratings: Village Super Market, Inc. (VLGEA), Marks & Spencer Group Plc (MAKSY), and Koninklijke Ahold Delhaize N.V. ADR (ADRNY).

For exploring more A and B-rated grocery stocks, click here.

What To Do Next?

Get your hands on this special report with 3 low priced companies with tremendous upside potential even in today’s volatile markets:

3 Stocks to DOUBLE This Year >

ACI shares fell $0.06 (-0.29%) in after-hours trading Monday. Year-to-date, ACI has gained 5.19%, versus a -0.80% rise in the benchmark S&P 500 index during the same period.

About the Author: Rjkumari Saxena

Rajkumari started her career as a writer but gradually shifted her focus to financial journalism, leveraging her educational background in Commerce. Fascinated by the interplay of business and economic shifts in equities, she aspires to evolve as an analyst. With a knack for simplifying complex financial concepts, her mission is to empower investors with insights that lead to profitable decisions. More...

More Resources for the Stocks in this Article