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Albertsons Jumps 3.5% on Exceeding Q2 Expectations; Lifts FY21 Guidance

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American food and drug retailer Albertsons Companies, Inc. (ACI) delivered better-than-expected second-quarter results and lifted its full-year Fiscal 2021 guidance. Following the news, shares jumped 3.5% to close at $29.51 on October 18.

The company reported adjusted earnings of $0.64 per share, up 6.7% year-over-year, and significantly beat analyst estimates of $0.44 per share.

To add to that, total sales climbed 4.7% year-over-year to $16.5 billion and also outpaced Street estimates of $15.72 billion. Also, identical sales grew 1.5%, and digital sales jumped 5% year-over-year.

Commenting on the results, Vivek Sankaran, CEO of Albertsons, said, “The favorable consumer backdrop together with our focus on in-store excellence, accelerating our digital and omnichannel capabilities, increasing productivity and strengthening our talent and culture, are driving increased identical sales and improved performance.”

Furthermore, Albertsons declared a 20% hike to its quarterly common dividend to $0.12 per common share. The dividend will be paid on November 12 to shareholders of record on October 29. (See Insiders’ Hot Stocks on TipRanks)

Based on the strong quarterly performance, Albertsons lifted its Fiscal 2021 outlook. ACI now forecasts adjusted earnings to fall in the range of $2.50 – $2.60 per share, much higher than the consensus estimate of $2.28 per share.

Recently, Evercore ISI analyst Michael Montani downgraded the stock to a Hold from a Buy while assigning a price target of $30, implying 1.7% upside potential to current levels.

The analyst said, “The supply chain is stretched for the industry, yet freight and product availability should be manageable headwinds, in our view. ACI has been an outperformer up 54% year to date, yet it is down 20% from recent highs with two downgrades in the past week lowering the bar into earnings.”

Overall, the stock has a Hold consensus rating based on 3 Buys, 6 Holds, and 2 Sells. The average Albertsons price target of $29.10 implies 1.4% downside potential to current levels. Shares have gained 105.2% over the past year.

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