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Investing.com - UBS upgraded Albertsons Companies Inc. (NYSE:ACI) from Neutral to Buy on Tuesday, raising its price target to $27.00 from $22.00. The grocery chain, currently trading at $20.04 with a market capitalization of $11.3 billion, shows attractive valuation metrics according to InvestingPro data, with a P/E ratio of 12.2.
The investment bank’s adjusted earnings per share estimates for Albertsons are 4% above FactSet consensus for fiscal year 2026 and 8% higher for fiscal year 2027, according to UBS.
UBS believes the recent pullback in Albertsons stock fails to reflect several growth opportunities, including pharmacy cross-shopping and digital initiatives that could drive same-store sales growth of 2.5% in fiscal year 2026, approximately 40 basis points above consensus estimates.
The firm also highlighted Albertsons’ profitability potential from centralizing buying operations and retail media, projecting an operating margin of 2.5% for fiscal year 2026, which exceeds consensus by 10 basis points. InvestingPro analysis reveals management’s aggressive share buyback program, suggesting confidence in the company’s future performance. Get access to 7 additional exclusive ProTips and comprehensive valuation analysis with an InvestingPro subscription.
UBS noted that Albertsons has already lowered expectations for fiscal year 2025 as it invests in value and aims to accelerate grocery unit volume growth, creating what the firm calls an "achievable base" from which the company can repurchase shares and consistently exceed earnings expectations.
In other recent news, Albertsons Companies announced its Q1 2025 earnings, reporting an adjusted earnings per share (EPS) of $0.55, which met analyst expectations. The company achieved a revenue of $24.88 billion, surpassing forecasts by $200 million. Despite these results, the stock experienced a decline in pre-market trading. Albertsons also revised its fiscal year 2025 sales growth guidance to a range of 2.0% to 2.75%. The company highlighted a significant increase in e-commerce sales, which grew by 25%, now constituting 9% of its grocery revenue. Albertsons continues to invest in its digital platforms, aiming for enhanced customer engagement and operational efficiencies. The company is also making strategic investments in technology to support growth and productivity. These developments reflect Albertsons’ ongoing efforts to strengthen its market position amid competitive pressures and economic conditions.
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