SFM - Albertsons Is Still Trading At A Steep Discount, Even After Strong Upside
2025-01-17 08:00:00 ET
Summary
- Albertsons Companies remains a strong buy despite the blocked Kroger merger, with shares rising 13.7% since the merger collapse.
- The company shows growth in revenue and profits, driven by its pharmacy business and identical sales increases, despite some financial underperformance.
- Shares are attractively priced both on an absolute basis and relative to peers, with potential upside from litigation against Kroger Co.
- Albertsons' litigation against Kroger could yield significant financial benefits, adding to its already strong investment case.
The last few months have been a very interesting time for shareholders of grocery giant Albertsons Companies ( ACI ). On December 11th, of last year, news broke that the courts decided to block the merger between that business and Kroger Co ( KR ). Even though I personally wanted the deal to go through, I have long maintained that the picture would be fine even if a transaction did not occur. In fact, I even wrote an article about this back in April of 2023. In that piece, I claimed that the business would be fine even if the merger collapsed. And since I last reaffirmed the company as a ‘strong buy’ back in October of last year, shares have risen by 13.7% at a time when the S&P 500 is up only 0.3%. In fact, most of that gain has come since the merger collapsed, with shares up an impressive 13.3%....
Albertsons Is Still Trading At A Steep Discount, Even After Strong Upside