Albertsons Companies, Inc. (NYSE:ACI) Earnings Preview: Key Financial Ratios in Focus

• Albertsons Companies, Inc. (NYSE:ACI) reported Q3 2024 earnings with revenue of approximately $18.77 billion, missing estimates.
• The company's price-to-earnings (P/E) ratio stands at 11.07, indicating market valuation of its earnings.
• ACI's debt-to-equity ratio is high at 4.22, pointing to a significant level of debt.

Albertsons Companies, Inc. (NYSE:ACI) is a major player in the grocery industry, operating numerous supermarket chains across the United States. The company competes with other large retailers like Kroger and Walmart. On January 8, 2025, ACI reported its earnings for the third quarter of 2024, revealing a revenue of approximately $18.77 billion, which was slightly below the estimated $18.93 billion.

The earnings call, held on the same day, featured key figures such as CEO Vivek Sankaran and CFO Sharon McCollam. Analysts from major financial institutions like JPMorgan and Wells Fargo participated, highlighting the significance of ACI's financial performance. Despite the revenue shortfall, the company's earnings exceeded expectations, leading to a rise in ACI's stock price.

ACI's financial metrics provide further insight into its market position. The company has a price-to-earnings (P/E) ratio of 11.07, indicating how the market values its earnings. Its price-to-sales ratio of 0.14 suggests a relatively low market valuation compared to its revenue, while the enterprise value to sales ratio of 0.32 reflects a modest enterprise value in relation to sales.

The company's financial health is also evident in its earnings yield of 9.03%, offering a glimpse into the return on investment for shareholders. However, ACI's debt-to-equity ratio is high at 4.22, indicating a significant level of debt compared to equity. The current ratio of 0.93 suggests that ACI has slightly less than enough current assets to cover its current liabilities, which could be a point of concern for investors.

• The consensus price target for NYSE:ACI has been on an upward trend, indicating growing confidence among analysts.
• Strategic business decisions and improved financial performance are key drivers behind the positive shift in the consensus price target.
• Albertsons is recognized as a potential value stock by Zacks, suggesting it could be a strong investment pick.

Albertsons Companies, Inc. (NYSE:ACI) is a prominent entity in the U.S. food and drug retail sector. It operates over 2,276 stores and 1,722 pharmacies under various well-known banners. The company also manages numerous distribution centers and manufacturing sites, making it a significant player in the industry. Albertsons competes with other major retailers like Kroger and Walmart.

The consensus price target for ACI's stock has shown an upward trend over the past year. A year ago, the average price target was $22.13, which increased to $22.5 in the last quarter and further rose to $24 in the last month. This suggests growing confidence among analysts in the company's stock performance. UBS analyst Mark Carden has set an even higher price target of $33, indicating a positive outlook.

This positive shift in the consensus price target could be attributed to strategic business decisions and improved financial performance. Albertsons is set to release its earnings soon, as highlighted by CNBC's Jim Cramer. This event, along with new economic data releases, is expected to impact the market significantly, despite being described as a "light week."

Albertsons is also recognized as a potential value stock, according to an analysis by Zacks. The Zacks Rank system focuses on earnings estimates and revisions to identify promising stocks. This analysis, along with trends in value, growth, and momentum, suggests that ACI could be a strong investment pick. Investors might find this trend encouraging, indicating potential growth and value in Albertsons Companies, Inc.'s stock.

• Albertsons Companies, Inc. (NYSE:ACI) is set to release its quarterly earnings with an anticipated EPS of $0.66 and revenue of $18.85 billion.
• The company's financial metrics reveal a price-to-earnings (P/E) ratio of 11.39 and a debt-to-equity ratio of 2.62, indicating a higher level of debt.
• Albertsons' current ratio of 0.90 suggests potential challenges in meeting short-term obligations.

Albertsons Companies, Inc. (NYSE:ACI) is a major player in the U.S. food and drug retail sector. The company operates a vast network of 2,267 retail stores, 1,726 pharmacies, and 405 fuel centers across 34 states and the District of Columbia. Albertsons also manages 22 distribution centers and 19 manufacturing facilities, making it a significant force in the industry.

On January 8, 2025, ACI will release its quarterly earnings, with Wall Street anticipating an earnings per share of $0.66 and revenue of approximately $18.85 billion. The earnings release will be followed by a conference call at 8:30 a.m. Eastern Time, accessible through the company's investor relations page. A replay will be available for two weeks.

Albertsons' financial metrics provide insight into its market valuation. The company has a price-to-earnings (P/E) ratio of 11.39, reflecting how the market values its earnings. A price-to-sales ratio of 0.14 suggests a relatively low market valuation compared to its revenue, while the enterprise value to sales ratio of 0.32 indicates the company's total valuation in relation to its sales.

The enterprise value to operating cash flow ratio of 9.42 highlights Albertsons' cash flow generation relative to its valuation. An earnings yield of 8.78% offers a perspective on the return on investment for shareholders. However, a debt-to-equity ratio of 2.62 points to a higher level of debt compared to equity, which could be a concern for investors.

Albertsons' current ratio of 0.90 indicates its ability to cover short-term liabilities with short-term assets. This ratio suggests that the company may face challenges in meeting its short-term obligations, which is an important consideration for stakeholders.

RBC Capital analysts provided a review of Albertsons Companies, Inc. (NYSE:ACI) ahead of the upcoming Q4/23 earnings report on April 11.

According to the analysts, food channel dollar sales throughout the company’s regions grew approximately 6% in Q4 (vs. Street estimate of 4.6%) and are trending in the low 5's% in the first four weeks of Q1 (vs. Street’s estimate of 3.1%), both led by low-to-mid teens pricing.

On March 28, RBC Capital hosted an expert speaker call with Numerator's Chief Economist, Dr. Leo Feler, to provide perspective on the FTC’s process, next steps, and likely deal outcomes. The analysts’ perspective was mostly confirmed, which indicated that in order to obtain clearance, ACI/KR would need to sell off approximately 650 stores.

The analysts expect FTC to file a lawsuit in the coming months, recommending the merger be blocked.

RBC Capital analysts provided their outlook on Albertsons Companies, Inc. (NYSE:ACI) ahead of the upcoming Q3 results announcement.

The analysts believe Q3 fundamentals will largely be glossed over by investors given the pending merger with KR. Inflation and merger commentary will likely be the primary focus.

The analysts remain of the view that the FTC will push for divestitures towards the upper end of the 650-store limit outlined in the merger agreement. They ultimately believe shares will trade sideways until there is more clarity on a potential outcome.

According to the analysts, food channel dollar sales throughout the company's regions grew approximately 7.4% in Q3 (vs. Street’s 4.5%) and are trending up 9.7% Q4 to date.

RBC Capital analysts hosted Albertsons Companies, Inc.(NYSE:ACI) management, including the President and CFO Sharon McCollam for a series of virtual meetings.

The most-discussed topics were (1) the impact of reduced SNAP benefits, (2) inflation expectations/ability to take price, (3) the strategic review, and (4) the advertising business. The analysts believe the company is well positioned for the current environment.

According to the analysts, the management’s constructive tone paired with their proprietary IRI analysis prompts them to raise the Q1 ID sales growth estimate from 4.5% to 5.5% (vs, Street’s 5.3%). However, the analysts maintained their Q1 EPS estimate of $0.96. Their outperform rating and $37 price target were also maintained.