Albertsons (ACI) stock rallied after the company beat on some estimates for its Fiscal third quarter and raised its guidance. An earnings beat and raise eclipsed a miss on sales as investors saw an upbeat signal from the grocer as it looks to go it alone after the collapse of its $25 billion move on Kroger (KR).
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Investments in its pharmacy division and loyalty program paid off even though grocery demand was lacklustre in the face of stern competition, the firm noted as it reported identical sales and online sales up 2% and 23% respectively.
ACI Raises Guidance after Kroger Call-Off
In a sign Albertsons is moving forward positively following the collapse of the Kroger deal, the company says it expects earnings per share (EPS) between $2.25 and $2.31, compared to the previous range between $2.20 and $2.30 and the consensus estimate of $2.26.
The company says it will invest in stores, tech and employees as it seeks to drive organic growth after the Kroger deal was called off. A particular focus is on the pharmacy business and its new digital and wellness platform, Sincerely Health.
For Fiscal 2024, adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) is now forecast in the range of $3.95 billion to $3.99 billion, up from the previously guided range of $3.90 billion to $3.98 billion.
However, the company, which is suing Kroger, lowered the upper end of its sales growth forecast for the year, down to a range of 1.8% to 2.0%, having previously guided growth at 1.8% to 2.2%.
ACI EPS Beats, But Still Down
ACI posted EPS of $0.71 for Fiscal Q3, beating analyst expectations of $0.66. Revenue growth was mild and rose 1.2% to $18.77 billion, which was just below the consensus estimate of $18.79 billion.
And although adjusted EBITDA of $1.07 billion was down 3.7% year-over-year, this was ahead of the $1.02 billion estimate. Gross profit margin stood at 27.9%, matching expectations and largely flat year-over-year.
Is ACI a Good Stock to Buy?
Overall, Wall Street has a Moderate Buy consensus rating on ACI, based on six Buys, five Holds and zero Sells. The average price target is $22.33, which represents a 13.2% upside potential from the last price of $19.72. ACI stock has fallen by 12% in the last 12 months.
