Was Albertsons' 2020 IPO Overlooked?

ACI appears undervalued compared to its growth potential

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Albertsons Companies, Inc. (NYSE:ACI) is one of the largest food and drug retailers in the United States, operating more than 2,200 retail food and drug stores with over 1,700 pharmacies and 400 associated fuel centers across 34 states.

ACI did not become a publicly traded company until June of 2020. On June 26, shares of ACI common stock began trading at $16.00 per share. Since its initial public offering (IPO), Albertsons stock price has seen a 52-week low of $12.91 on Sept. 18 culminate in a record high of $17.82 on Monday.

ACI Stock Chart

Investors should take a closer look at Albertsons stock as the company gears up for its first earnings report of 2021 on Jan. 12. ACI scored a post-earnings pop of 5.8% back in mid October, and the company's first earnings report resulted in a 5.4% drop on the charts. For this upcoming report, options traders are pricing in a much larger 9.1% move after the quarterly report.

With less than 12 months as a public company, Albertsons announced its first ever cash dividend following the third quarter of 2020. ACI paid its investors out at $0.10 per share.

While other IPO’s like Airbnb (ABNB) and DoorDash (DASH) stole headlines for weeks, Albertsons' IPO stayed under the radar in 2020. This is kind of odd, as ACI appears to have all the qualities of a great value stock, which includes an amazing forward-price earnings ratio of 10.99 that might even still be a modest estimate. In addition, ACI has a consistent history of top and bottom line growth. Albertsons has added over $8 billion in total revenue since 2017, bringing its total stacked up to $68 billion over the past 12 months. In a similar fashion, the company has also added over $1.3 billion in net profit since 2017, bringing its total net profits up to nearly $1 billion over the past 12 months.

Albertsons stock is well positioned for more solid growth in 2021. The company has already begun administering vaccines and is preparing to meet the high demand for immunizations in the U.S. In December, Albertsons announced a series of proactive customer-oriented measures including the launch of a new website with important information for the public and the implementation of high safety standards in its pharmacies and stores. In the December press release, Albertsons also announced its plans to hire additional pharmacy staff nationwide to ensure it meets demand for vaccine distribution.

 

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