Is it too late to buy ACI after its 40% growth?
Albertsons Companies, Inc. (NYSE:ACI) is one of the largest food and pharmaceutical retailers in the United States. ACI operates 2,276 retail stores with 1,722 pharmacies, 402 associated fuel centers, 22 dedicated distribution centers and 20 manufacturing plants. The retailer operates with 24 brands, including Albertsons, Safeway, Vons, Jewel-Osco, Shaw’s, Acme, Tom Thumb, Randalls, United Supermarkets, Pavilions, Star Market, Haggen, Carrs, Kings Food Markets and Balducci’s Food Lovers Market.
Albertsons’ share price is up around 44% year-on-year and ACI is currently trading up 56% since hitting a 52-week low of 18.84 $ last June. However, ACI shares are currently trading at roughly the same price as they started the year despite falling 3% in the past month. Additionally, Albertsons stock price has fallen 22% since hitting an all-time high of $37.99 in December.
The retailer currently owes $14.04 billion in total debt, which is nearly equal to the company’s market capitalization of $15.6 billion. Albertsons Companies also only holds $2.92 billion in cash on its balance sheet, which will likely limit its long-term growth and earnings. Additionally, ACI is already expected to experience a drop in profits for fiscal 2023, with estimates suggesting a 7.8% drop in profits. However, Albertsons is still expected to increase revenue by 3.7% for fiscal year 2023, as well as revenue by 1.9% and profit by 2.1% for fiscal year 2024.
Albertsons shares retain a fair valuation with a forward price-to-earnings ratio of 9.62 and a price-to-sales ratio of 0.17. ACI also offers a dividend yield of 1.64% with a term dividend of $0.48, making the reward potential higher for long-term and dividend investors.
