CRERF - Ahold Delhaize: Marginally Better Value Relatative To Kroger

2025-05-29 12:51:56 ET

Summary

• Ahold Delhaize derives 60% of its sales from the United States, although recent M&A has boosted Europe's share to 40%.
• The company reported weak Q1 2025 margins, impacted by strength in online and pharmacy sales.
• Even so, Ahold Delhaize confirmed its full-year outlook, indicating the company should deliver an equity free cash flow yield of around 6.8% in 2025.
• This is particularly impressive when you factor in Ahold Delhaize's high capex spending and low leverage. As such, I confirm my Buy rating for the stock.
• Key risks to consider include persistent margin weakness, continued dollar depreciation, and Carrefour's more attractive valuation.

Introduction

So far in 2025, Ahold Delhaize ( OTCQX:ADRNY ) has significantly outperformed peers such as Carrefour ( OTCPK:CRRFY ) and Kroger ( KR ), delivering a return of ~32%:

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