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Albertsons Companies Inc Class A ACI

Morningstar Rating
$20.25 −0.03 (0.15%)
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Company Report

Kroger, Albertsons: As We Expected, Federal Trade Commission Sues to Block the Combination

After reviewing narrow-moat Kroger and no-moat Albertsons' planned merger for over a year, the US Federal Trade Commission ultimately deemed the nearly $25 billion deal anticompetitive and sued on Feb. 26 to block it. We have long held that the merger would face insurmountable regulatory scrutiny, thus to us, the decision was not unexpected. While the timing of future litigation and the ultimate court ruling remain uncertain, we still view the proposed deal as unlikely to close, and we do not plan to alter our $53 and $27 per share fair value estimates for Kroger and Albertsons, respectively.

Price vs Fair Value

ACI is trading within a range we consider fairly valued.
Price
$20.25
Fair Value
$61.00
Uncertainty
Medium
1-Star Price
$13.28
5-Star Price
$39.50
Economic Moat
Dnnl
Capital Allocation
Dxksgsrx

Bulls Say, Bears Say

Bulls

Albertsons benefits from a top-two standing in most of its major markets, providing benefits from local scale as advertising, distribution, and supply chain costs are spread over a large sales base.

Bears

Intense competition remains in grocery, pressuring prices and necessitating investment in the store experience.

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News

Trading Information

Previous Close Price
$20.28
Day Range
$20.1020.30
52-Week Range
$19.1423.88
Bid/Ask
$20.10 / $20.25
Market Cap
$11.66 Bil
Volume/Avg
4.4 Mil / 3.7 Mil

Key Statistics

Price/Earnings (Normalized)
6.45
Price/Sales
0.15
Dividend Yield (Trailing)
2.37%
Dividend Yield (Forward)
2.37%
Total Yield
2.37%

Company Profile

Albertsons is the second-largest conventional grocer in America, operating 2,271 stores under 24 banners in 34 states (as of the end of fiscal 2022). Around 75% of stores have pharmacies, while nearly 20% also sell fuel. Albertsons has a significant private-label operation, accounting for around 25% of sales (excluding fuel). While its own brand assortment is mainly manufactured by third parties, Albertsons operates 19 food production plants (as of the end of fiscal 2022). Albertsons is a top two grocer in two thirds of its major markets (as of early 2022, according to company data), and virtually all of its sales come from the United States. Narrow-moat Kroger has offered to acquire Albertsons in a $25 billion deal; if the transaction is approved by regulators, it should close in 2024.
Sector
Consumer Defensive
Industry
Grocery Stores
Stock Style Box
Mid Value
Total Number of Employees
290,000

Competitors

Valuation

Metric
ACI
AD
KR
Price/Earnings (Normalized)
6.4510.6811.27
Price/Book Value
4.611.763.15
Price/Sales
0.150.300.24
Price/Cash Flow
3.014.095.83
Price/Earnings
ACI
AD
KR

Financial Strength

Metric
ACI
AD
KR
Quick Ratio
0.130.400.29
Current Ratio
0.850.730.80
Interest Coverage
3.873.896.56
Quick Ratio
ACI
AD
KR

Profitability

Metric
ACI
AD
KR
Return on Assets (Normalized)
6.80%5.03%6.42%
Return on Equity (Normalized)
100.04%16.10%30.83%
Return on Invested Capital (Normalized)
13.40%11.58%11.67%
Return on Assets
ACI
AD
KR
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Economic Moat
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