Albertsons (ACI) – Cheap Supermarket Stock at ~7x Forward Earnings

Albertsons is back around **$12**, and at this price I think it’s getting interesting again.

Management now guides to **$1.75-$1.85 EPS**, so ACI trades at roughly **7x forward earnings**. The dividend is about **5.5%**, and they still have a **$2B buyback authorization**, which is huge compared to a \~$6B market cap.

The obvious issue is that the business has weakened. Same-store sales were down last quarter, margins are under pressure, and management cut guidance pretty hard. Competition from Walmart, Amazon, Aldi etc. is clearly hurting.

That said, I don’t think much needs to go right here. If earnings stabilize around current levels and the stock eventually gets even a **10-12x multiple**, that puts fair value somewhere around **$18-$22**.

There’s also some optional upside from the ongoing lawsuit against Kroger over the **$600M breakup fee**, but I wouldn’t include that in the base case.

Main risks are continued margin pressure, debt, and ACI losing more market share.

Pretty boring company, but at \~7x earnings + a 5.5% yield + aggressive buybacks, I think the risk/reward looks decent.