Is it too late to buy ACI after its 40% growth?
Albertsons Companies, Inc. (NYSE:ACI) is one of the largest food and drug 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 facilities. 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 stock price has increased about 44% year-over-year and ACI is currently trading up 56% since dropping to a 52-week low of $18.84 last June. However, shares of ACI currently trade at around the same price they did at the start of the year despite experiencing a 3% decrease over the past month. Additionally, Albertsons stock price has dropped 22% since peaking at 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 cap of $15.6 billion. Albertsons Companies also holds just $2.92 billion in cash on their balance sheet, which will likely limit their growth and profits in the long run. Furthermore, ACI is already expected to experience a decline in earnings for fiscal 2023, with estimates suggesting a 7.8% decrease in earnings. However, Albertsons is estimated to still grow revenues by 3.7% for fiscal 2023, as well as increase revenues by 1.9% and earnings by 2.1% for fiscal 2024.
Albertsons stock maintains a fair valuation at a forward price-earnings ratio of 9.62 and a price-sales ratio of 0.17. ACI also also offers a dividend yield of 1.64% with a forward dividend of $0.48, making the reward potential higher for long-term and dividend investors.