Latest news with #AlbertsonsCompanies'
Yahoo
15-05-2025
- Business
- Yahoo
Despite lower earnings than three years ago, Albertsons Companies (NYSE:ACI) investors are up 14% since then
For many investors, the main point of stock picking is to generate higher returns than the overall market. But the risk of stock picking is that you will likely buy under-performing companies. We regret to report that long term Albertsons Companies, Inc. (NYSE:ACI) shareholders have had that experience, with the share price dropping 21% in three years, versus a market return of about 55%. Since Albertsons Companies has shed US$495m from its value in the past 7 days, let's see if the longer term decline has been driven by the business' economics. Our free stock report includes 2 warning signs investors should be aware of before investing in Albertsons Companies. Read for free now. To paraphrase Benjamin Graham: Over the short term the market is a voting machine, but over the long term it's a weighing machine. One flawed but reasonable way to assess how sentiment around a company has changed is to compare the earnings per share (EPS) with the share price. Albertsons Companies saw its EPS decline at a compound rate of 15% per year, over the last three years. In comparison the 7% compound annual share price decline isn't as bad as the EPS drop-off. This suggests that the market retains some optimism around long term earnings stability, despite past EPS declines. You can see below how EPS has changed over time (discover the exact values by clicking on the image). We're pleased to report that the CEO is remunerated more modestly than most CEOs at similarly capitalized companies. It's always worth keeping an eye on CEO pay, but a more important question is whether the company will grow earnings throughout the years. It might be well worthwhile taking a look at our free report on Albertsons Companies' earnings, revenue and cash flow. When looking at investment returns, it is important to consider the difference between total shareholder return (TSR) and share price return. The TSR incorporates the value of any spin-offs or discounted capital raisings, along with any dividends, based on the assumption that the dividends are reinvested. It's fair to say that the TSR gives a more complete picture for stocks that pay a dividend. In the case of Albertsons Companies, it has a TSR of 14% for the last 3 years. That exceeds its share price return that we previously mentioned. This is largely a result of its dividend payments! Albertsons Companies shareholders are up 6.3% for the year (even including dividends). While you don't go broke making a profit, this return was actually lower than the average market return of about 12%. On the other hand, the TSR over three years was worse, at just 4% per year. This suggests the company's position is improving. If the business can justify the share price gain with improving fundamental data, then there could be more gains to come. It's always interesting to track share price performance over the longer term. But to understand Albertsons Companies better, we need to consider many other factors. Case in point: We've spotted 2 warning signs for Albertsons Companies you should be aware of. But note: Albertsons Companies may not be the best stock to buy. So take a peek at this free list of interesting companies with past earnings growth (and further growth forecast). Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on American exchanges. Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
20-04-2025
- Business
- Yahoo
Are Investors Undervaluing Albertsons Companies, Inc. (NYSE:ACI) By 37%?
Albertsons Companies' estimated fair value is US$34.56 based on 2 Stage Free Cash Flow to Equity Albertsons Companies is estimated to be 37% undervalued based on current share price of US$21.71 The US$23.41 analyst price target for ACI is 32% less than our estimate of fair value Does the April share price for Albertsons Companies, Inc. (NYSE:ACI) reflect what it's really worth? Today, we will estimate the stock's intrinsic value by taking the expected future cash flows and discounting them to their present value. One way to achieve this is by employing the Discounted Cash Flow (DCF) model. Before you think you won't be able to understand it, just read on! It's actually much less complex than you'd imagine. We generally believe that a company's value is the present value of all of the cash it will generate in the future. However, a DCF is just one valuation metric among many, and it is not without flaws. For those who are keen learners of equity analysis, the Simply Wall St analysis model here may be something of interest to you. We've discovered 2 warning signs about Albertsons Companies. View them for free. We use what is known as a 2-stage model, which simply means we have two different periods of growth rates for the company's cash flows. Generally the first stage is higher growth, and the second stage is a lower growth phase. To start off with, we need to estimate the next ten years of cash flows. Where possible we use analyst estimates, but when these aren't available we extrapolate the previous free cash flow (FCF) from the last estimate or reported value. We assume companies with shrinking free cash flow will slow their rate of shrinkage, and that companies with growing free cash flow will see their growth rate slow, over this period. We do this to reflect that growth tends to slow more in the early years than it does in later years. Generally we assume that a dollar today is more valuable than a dollar in the future, and so the sum of these future cash flows is then discounted to today's value: 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 Levered FCF ($, Millions) US$945.0m US$1.28b US$1.24b US$1.26b US$1.23b US$1.25b US$1.26b US$1.27b US$1.30b US$1.32b Growth Rate Estimate Source Analyst x4 Analyst x4 Analyst x3 Analyst x2 Analyst x2 Analyst x2 Est @ 0.83% Est @ 1.40% Est @ 1.81% Est @ 2.09% Present Value ($, Millions) Discounted @ 8.0% US$875 US$1.1k US$982 US$922 US$838 US$783 US$731 US$686 US$646 US$611 ("Est" = FCF growth rate estimated by Simply Wall St)Present Value of 10-year Cash Flow (PVCF) = US$8.2b We now need to calculate the Terminal Value, which accounts for all the future cash flows after this ten year period. For a number of reasons a very conservative growth rate is used that cannot exceed that of a country's GDP growth. In this case we have used the 5-year average of the 10-year government bond yield (2.8%) to estimate future growth. In the same way as with the 10-year 'growth' period, we discount future cash flows to today's value, using a cost of equity of 8.0%. Terminal Value (TV)= FCF2034 × (1 + g) ÷ (r – g) = US$1.3b× (1 + 2.8%) ÷ (8.0%– 2.8%) = US$26b Present Value of Terminal Value (PVTV)= TV / (1 + r)10= US$26b÷ ( 1 + 8.0%)10= US$12b The total value is the sum of cash flows for the next ten years plus the discounted terminal value, which results in the Total Equity Value, which in this case is US$20b. In the final step we divide the equity value by the number of shares outstanding. Relative to the current share price of US$21.7, the company appears quite undervalued at a 37% discount to where the stock price trades currently. The assumptions in any calculation have a big impact on the valuation, so it is better to view this as a rough estimate, not precise down to the last cent. The calculation above is very dependent on two assumptions. The first is the discount rate and the other is the cash flows. You don't have to agree with these inputs, I recommend redoing the calculations yourself and playing with them. The DCF also does not consider the possible cyclicality of an industry, or a company's future capital requirements, so it does not give a full picture of a company's potential performance. Given that we are looking at Albertsons Companies as potential shareholders, the cost of equity is used as the discount rate, rather than the cost of capital (or weighted average cost of capital, WACC) which accounts for debt. In this calculation we've used 8.0%, which is based on a levered beta of 1.223. Beta is a measure of a stock's volatility, compared to the market as a whole. We get our beta from the industry average beta of globally comparable companies, with an imposed limit between 0.8 and 2.0, which is a reasonable range for a stable business. See our latest analysis for Albertsons Companies Strength Debt is well covered by earnings and cashflows. Dividends are covered by earnings and cash flows. Weakness Earnings declined over the past year. Dividend is low compared to the top 25% of dividend payers in the Consumer Retailing market. Opportunity Annual earnings are forecast to grow for the next 3 years. Good value based on P/E ratio and estimated fair value. Threat Annual earnings are forecast to grow slower than the American market. Whilst important, the DCF calculation ideally won't be the sole piece of analysis you scrutinize for a company. DCF models are not the be-all and end-all of investment valuation. Rather it should be seen as a guide to "what assumptions need to be true for this stock to be under/overvalued?" If a company grows at a different rate, or if its cost of equity or risk free rate changes sharply, the output can look very different. What is the reason for the share price sitting below the intrinsic value? For Albertsons Companies, there are three fundamental aspects you should consider: Risks: Take risks, for example - Albertsons Companies has 2 warning signs we think you should be aware of. Future Earnings: How does ACI's growth rate compare to its peers and the wider market? Dig deeper into the analyst consensus number for the upcoming years by interacting with our free analyst growth expectation chart. Other High Quality Alternatives: Do you like a good all-rounder? Explore our interactive list of high quality stocks to get an idea of what else is out there you may be missing! PS. Simply Wall St updates its DCF calculation for every American stock every day, so if you want to find the intrinsic value of any other stock just search here. Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned. Sign in to access your portfolio
Associated Press
15-04-2025
- Business
- Associated Press
Albertsons Companies Offers Bag Opt Outs for Curbside Orders
Albertsons Companies' customers can choose to opt out of bags for curbside pickup orders from their local stores. The grocer's goal is to reduce the number of single-use bags each year, supporting both local communities and the planet. Customers can opt out of bags when they order curbside pickup from Albertsons Cos. stores using the banner store app or website. See original post on LinkedIn and read more about Albertsons Companies and our Recipe for Change on our website. Visit 3BL Media to see more multimedia and stories from Albertsons Safeway Inc.
