Albertsons Will Report Continued Solid Q3 Earnings Aided By Macro Trends, Says Analyst

Telsey Advisory Group analyst Joseph Feldman has reiterated a Market Perform rating on the shares of Albertsons Companies Inc ACI with a price target of $27.25.
The analyst expects continued solid 3Q22 results, given supportive macro trends for the grocery industry.
Elevated at-home consumption, high inflation, structural changes in eating habits, including healthier options, and gains from company-specific initiatives, including private brands, loyalty, and digital, are likely to help growth, said the analyst.
The analyst believes 3Q22 grocery trends remained solid, evidenced by the latest data, including U.S. retail sales of food & beverages were 7.2% in September, 6.6% in October, and 8.8% in November.
Food-At-Home CPI was 13.0% in September, 12.4% in October, and 12.0% in November.
The solid trends support the analyst's raised 3Q22 ID sales projection and above-consensus adjusted EBITDA forecast.
Feldman believes Albertsons' transformation should continue to drive market share, earnings growth, and free cash flow for multiple years.
The analyst said the company should continue to benefit from the structural shift in consumer shopping behavior toward digital and increased at-home consumption, as well as transformative initiatives.
Albertsons' valuation remains dependent on its potential merger with Kroger Company KR, said the analyst.
The analyst supports Kroger's acquisition of Albertsons, but there remains uncertainty related to the special dividend of $6.85 and the number of potential store closures.
The analyst raised 3Q22 ID sales projection to 5.5% from 3.5% versus the FactSet consensus (FS) of 4.8%, driven by higher inflation and at-home consumption trends.
Price Action: ACI shares are trading lower by 0.17% at $20.82 on the last check Friday.
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