Albertsons Companies, Inc. (ACI): what the price assumes

boothcheck covers Albertsons Companies, Inc. (ACI) but does not put one priced-in number on it: here the defensible answer is the evidence rather than a point estimate. boothcheck publishes no house fair value, target price, or buy/sell rating. Narrative composed 2026-07-25.

Generated: 2026-08-30 · Exported: 2026-08-31 · Source: https://boothcheck.com/report/ACI

Headline

What The Price Assumes (Inversion)

The assumption today's price embeds, recovered by inverting the valuation.

The price sits below what even a 5%/yr operating-profit decline would warrant; the inversion reports a bound, not a solved growth path.

Solve inputs: computed at a 6% cost of capital with 4% terminal growth over a 5-year stage (computed at the 6% minimum rate; the CAPM rate 4.5% sits below it).

How unusual the bet is: within-range (limited comparison data)

Valuation X-Ray

Asset, earnings-power and peer-multiple models all land far below the price; ONLY the growth-DCF reaches it. The bet is durable compounding the static frames structurally cannot price (a moat/durability premium).

How the valuation models price the stock relative to the market price. Price/FV above 1.0 means the market pays more than that lens defends (expensive); at or below 1.0 the lens can defend the price.

Families that justify the price: Growth Families that call it expensive: Asset, Earnings, Relative

The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 5.3%); the inversion above states its own rate.

Per-Model Detail (n=13)

Economic-Unit Decomposition (Sum Of The Parts)

Only one reportable economic unit is present in the current topology source. Consolidated operating lenses remain available, but there is no multi-unit decomposition.

No total common-equity value is stated. One or more material units lack a supported unit value. The displayed values are an indicative subtotal; consolidated debt and cash cannot be applied to a fraction of the company.

Solvency

Leverage and coverage are computed on normalized mid-cycle operating income (mid-cycle margin 2.1%); the trailing year was depressed.

Interest expense is not separately reported in the latest filings, so interest coverage cannot be computed.

Bullet Takeaways

• Scale and a direct customer relationship are the two assets here, and the 10-K quantifies both: "We have 51.2 million members currently enrolled in our loyalty program", served through roughly 280,000 employees across a dozen regional banners as of February 28, 2026.
• The gap between $1.75 billion of trailing operating profit and $217.4 million of trailing net profit is the whole risk in one line, because what sits between them is depreciation on the stores and the cost of carrying the borrowings.
• Identical sales turned negative in the first quarter of fiscal 2026 and management cut the full-year outlook alongside the print, so the next real information event is whether the new four-region operating structure arrests the trend.

Bull Case

Grocery is a business where a point of operating margin separates a good operator from a struggling one, and Albertsons currently runs at 2.1%. Put that against the cohort and the ranking is informative rather than flattering: Kroger (KR) converts 1.33% of a $148.6 billion revenue base into operating profit, Weis (WMK) 2.55% on $5.0 billion, BJ's 3.74%, Costco (COST) 3.82% and Walmart (WMT) 4.16%. Albertsons sits above the closest large conventional supermarket operator and below the warehouse and supercenter formats, which is roughly where a full-service regional grocer with a pharmacy counter should sit. It is not a broken operator. It is a mid-pack one in a category where mid-pack still throws off substantial cash.

What makes the position defensible is that customers identify with the local banner rather than with the corporate parent. Randalls, Tom Thumb, Jewel-Osco, ACME, Shaw's, Safeway and the rest carry decades of regional habit, while the buying power, distribution network and technology sit at national scale behind them. The 10-K puts numbers on the reach: roughly 280,000 employees serving on average 36.5 million customers each week as of February 28, 2026. Grocery is a proximity business, and the store nearest a customer's commute wins more often than the one with the better app.

The direct customer relationship is the more durable asset, and the company has been explicit about defending it. The filing states that "We have 51.2 million members currently enrolled in our loyalty program" and that "We have achieved significant success with active participants in our loyalty program, which drives higher sales and customer retention." That membership base is what makes a retail media network possible at all, because advertising against known purchase behavior is worth several times advertising against foot traffic. It is also the reason the risk section treats disintermediation as a first-order threat rather than a marketing inconvenience.

Own Brands is the margin lever that does not depend on price competition, and it is at real scale: the portfolio "provides high-quality products to our customers at an attractive price point, offering more than 14,000 unique items." Fourteen thousand items is not a private-label experiment. It is a manufacturing and sourcing operation, and every unit sold under it carries margin that would otherwise go to a branded supplier. The supply side is diversified to match, with only one third-party supplier representing more than 5% of fiscal 2025 sales.

Underneath the merchandising, the revenue base held. Fiscal 2025 net sales and other revenue reached $83,172.5 million against $80,390.9 million the year before, built on an identical sales increase of 2.0% plus roughly $1.4 billion from an extra week in the fiscal calendar. And the share count has been coming down about 1.8% a year over the four years to late 2025, which means the per-share claim on that revenue base has been quietly growing while the stock has not.

The bear case is about the debt, and it is a fair one. But the borrowings are serviced by a business that sells food to 36.5 million people a week, which is about as predictable a revenue stream as retail offers.

Bear Case

The assumption doing the most work in this price is that same-store sales stabilize, and in the most recent quarter they did the opposite. Identical sales fell 0.8% in the first quarter of fiscal 2026, and management responded by cutting the full-year outlook, taking the identical sales range down to a decline and reducing both the earnings and cash-flow guidance ranges materially. For a business with 2.1% operating margins, small changes in same-store volume are not small. The fixed costs of a supermarket, the rent, the refrigeration, the labor to stock shelves, do not move when the basket shrinks.

The prior year's growth flatters the trend on closer reading. Fiscal 2025 revenue of $83,172.5 million against $80,390.9 million looks like solid growth until you remove the roughly $1.4 billion contributed by a 53rd week in the fiscal calendar and the 2.0% identical sales increase that produced most of the rest. Meanwhile the filing reports that "Gross margin rate decreased to 27.2% in fiscal 2025". Selling slightly more at a slightly worse rate is a description of competitive pressure, not of pricing power.

That pressure has a named source and the company describes it in its own risk factors. Competitors have "aggressively added locations and adopted a multi-channel approach to marketing and advertising", and the disclosed response, "additional promotions, increased advertising, additional capital investment including for development of our digital offerings and retail media network", is a description of spending money to hold share. In the cohort, Sprouts (SFM) grew 10.2% with a 38.7% gross margin and Costco grew 9.2%, both several times the identical sales pace here. Losing share slowly to formats with structurally better economics is the standard way a conventional supermarket chain declines, and it rarely announces itself.

Then there is the pharmacy, 14% of revenue and the piece with the least control over its own pricing. The filing notes that "in-store pharmacy sales were influenced by evolving regulatory and reimbursement dynamics" and lists "third-party reimbursement policies, government contracting requirements, direct-to-consumer sales of prescription drugs, growth in online pharmacies" among the pressures it expects to continue. A segment whose price is set by insurers and whose customers are being courted by mail-order competitors is not a growth engine, and it currently sits between fresh food and fuel as the third-largest revenue line.

The capital structure amplifies all of it. That is why $1.75 billion of operating profit becomes $217.4 million at the bottom line. In a leveraged business the equity holder owns the residual, and the residual is what moves when identical sales swing a point in either direction. It cuts both ways, which is precisely the problem: the recovery case and the deterioration case are both magnified from here.

Valuation

Today's $11.03 works out to about 12.4 times company-wide operating income, and that is low enough that the price does not require growth to hold. It sits below the level that even a steady mid-single-digit annual decline in operating profit would warrant. On that reading the stock is not asking for much, and the frames that value cash flow over a long horizon agree.

The frames that value the balance sheet and the trailing earnings do not agree, and the disagreement is the point. Against the asset-value methods, which build up from book value and the return earned on it, the price sits about 2.2 times where they land. Against the earnings-power methods it sits about 1.53 times, and against the peer-multiple methods about 1.37 times. Only the forward growth methods reach today's level. So the map is not "cheap" or "expensive" so much as a question about which lens the buyer trusts, and the honest description of that lens is that it credits a long stream of stable cash flow discounted gently, while the static frames capitalize a much thinner trailing profit at a much higher required return.

The reason those two readings diverge so far is leverage, and the record is unusually clear about where it comes from. Net borrowings sit close to 5.0 times operating income on a pre-tax basis. Depreciation on the store base and the cost of carrying those borrowings are what turn $1.75 billion of operating profit into $217.4 million of trailing net profit, and every method that starts from the bottom line inherits the compression while every method that starts from operating cash flow does not.

Cohort position is consistent with that. Albertsons trades in the lower half of the multiple range for its comparison group, which is what a 2.1% operating margin and a levered balance sheet ought to produce next to Costco (COST) at 3.82% and Walmart (WMT) at 4.16%, both of which fund their growth from earnings rather than from borrowings.

The revenue base underneath all of it is real and disclosed: fiscal 2025 net sales and other revenue of $83,172.5 million, built on an identical sales increase of 2.0% and roughly $1.4 billion of extra-week effect. Share count has fallen about 1.8% a year over the four years to late 2025, so the per-share claim on that base has been slowly increasing.

What the price is actually asking, then, is narrow: not that the business grows, but that operating profit does not slide faster than a slow drift while the borrowings are carried. The most recent quarter is the first evidence in a while that the drift may be steeper than that.

Catalysts

The first quarter of fiscal 2026, covering the sixteen weeks ended June 20, 2026, was reported in late July and it reset the year. Net sales and other revenue of $24,941.6 million were essentially flat against $24,880.8 million a year earlier, identical sales fell 0.8%, and net income came in at $84.7 million, or $0.17 per share, against $236.4 million and $0.41 in the comparable quarter. Management cut full-year guidance at the same time, moving the identical sales range to a decline of 1.5% to 0.5% from a prior range of flat to up 1.0%, and lowering the fiscal 2026 adjusted EBITDA and adjusted earnings per share ranges, both company-defined measures, from their prior levels.

The response is a structural reorganization rather than a cost trim. The company is consolidating eleven operating divisions into four regions and centralizing merchandising under a program it calls ACI Edge, targeting roughly $200 million of annual run-rate benefit by fiscal 2027 against about $50 million of transition costs spread across fiscal 2026 and 2027. Centralizing merchandising in a chain built on regional banner identity is the tension worth watching: the savings are real and countable, while the risk to local assortment relevance is neither.

Two lines inside the quarter ran against the headline. Digital sales grew 13%, and pharmacy strength offset softer core grocery. Both are lower-margin than the center store they are replacing, which is why revenue mix, rather than revenue itself, is the number that will determine whether the reduced guidance proves conservative or optimistic.

Peer Cohorts (Per Segment, With Filing Citations)

Retail (reported)

• KR (KROGER CO)
• FY2025 10-K: $ 1,228 in 2024, $ 1,182 in 2023 and $ 1,129 in 2022. ​ 16. SEGMENT REPORTING ​ The Company operates supermarkets, multi-department stores and fulfillment centers throughout the United States. The Company's retail operations, which represent 98 % of the Company's consolidated sales, are its only reportable segment.…
• FY2025 10-K: …internally. All of the Company's operations are domestic. ​ ​ 97 ​ The accounting policies of the retail operations segment are the same as those described in the summary of significant accounting policies in Note 1 to the Consolidated Financial Statements. The Company's CODM assesses performance and allocates…
• SFM (Sprouts Farmers Market, Inc.)
• FY2025 10-K: …raw materials, fuel and other energy, high levels of unemployment and consumer debt, depressed home values, high tax rates, tariffs and other factors that affect consumer spending and confidence or buying habits. These factors, which are largely outside of our control, may materially adversely affect the demand for…
• FY2025 10-K: …distribution center network to support our growth. See "Business - Sourcing and Distribution" for additional information with respect to our distribution centers. 30 Table of Contents We believe our portfolio of long-term leases is a valuable asset supporting our retail operations, but we do not believe that any…
• WMK (WEIS MARKETS, INC)
• FY2025 10-K: …performance of the segment. The following table presents the retail segment's revenue, significant segment expenses, and segment operating and net income for the years ended December 27, 2025, December 28, 2024, and December 30, 2023: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2024 ​ 2023 (amounts in thousands) ​ ​ ​ 2025 ​ ​ ​…
• FY2025 10-K: …Risks The Company's industry is highly competitive. If the Company is unable to compete effectively, the Company's financial condition and results of operations could be materially affected. The retail food industry is intensely price competitive, and the competition the Company encounters may have a negative impact…
• WMT (WALMART INC.)
• FY2025 10-K: …differently. However, each has generally maintained a consistent contribution rate to the Company's net sales in recent years other than minor changes to the contribution rate for the Walmart International segment due to fluctuations in currency exchange rates. Additional information on our operating segments and…
• FY2025 10-K: …disciplined capital spend. Growth Our objective of prioritizing growth means we will focus on serving customers and members however they want to shop through our omni-channel business model. This includes increasing comparable store and club sales through increasing membership at Sam's Club U.S. and through Walmart+,…
• BJ (BJ’S WHOLESALE CLUB HOLDINGS, INC.)
• FY2025 10-K: 1 South Carolina 1 Segments Our retail operations, which include retail club and other sales procured from our clubs and distribution centers, represent substantially all of our consolidated total revenues, and are our only reportable segment. Substantially all of our identifiable assets are located in the United…
• FY2025 10-K: …We depend heavily on our ability to purchase merchandise in sufficient quantities at competitive prices and in a timely fashion. We source our merchandise from a wide variety of domestic and international vendors. Finding qualified vendors who meet our standards and acquiring merchandise in a timely and efficient…
• COST (COSTCO WHOLESALE CORP /NEW)
• FY2025 10-K: …or membership. Revenue from shop cards is recognized upon redemption, and estimated breakage is recognized based on redemption data. The Company accounts for outstanding shop card balances as a liability, net of estimated breakage. Shop card liabilities are included in other current liabilities in the consolidated…
• FY2025 10-K: …of its transactions and recognizes revenue on a gross basis. The Company is the principal when it has control of the merchandise or service before it is transferred to the member. The majority of revenue from merchandise sales is recognized at the point of sale. Revenue generated through e-commerce or special orders…

Methodology Note

• Priced-in inversion: the valuation is inverted on the current price to recover the operating-income growth, duration, and steady-state margin the price embeds (ROE for financials, FFO growth for REITs).
• Valuation x-ray: the valuation models, grouped into four families (asset, earnings, relative, growth). Each model is expressed as a price/FV ratio (distance from price), not a point fair-value estimate. The spread across families is the disagreement.
• Economic-unit decomposition (SOTP): each disclosed business unit is assigned its native valuation basis before any multiple is applied. Operating units are valued on enterprise value; funded financial units are valued on their own common equity, because their borrowings fund earning assets rather than levering the parent. A company total is stated only once every material unit carries a supported value and the parent capital bridge reconciles.
• Solvency: net cash/debt, net-debt-to-NOPAT, interest coverage, and share-count CAGR from EDGAR financials (net debt / FFO and fixed-charge coverage for REITs; regulatory-capital framing for financials).
• Peer cohorts: per-segment comparables with deep-linkable SEC filing citations.

Fundamentals sourced from SEC EDGAR filings. Current price from Databento. The priced-in inversion and valuation x-ray are computed by the boothcheck engine; narrative composed by AI from the structured data.