Albertsons Companies, Inc. (ACI): A Bull Case Theory

We came across a bullish thesis on Albertsons Companies, Inc. on Value investing subreddit by staniel_andy. In this article, we will summarize the bulls’ thesis on ACI. Albertsons Companies, Inc.'s share was trading at $17.35 as of October 2nd. ACI’s trailing and forward P/E were 10.58 and 8.26 respectively according to Yahoo Finance.

Albertsons Companies, Inc. (ACI) presents a compelling defensive investment opportunity in an expensive market, currently trading at $17.35, below 11x 2024 earnings and with an EV/Sales of 0.2, making it attractively valued relative to peers like Kroger and Weis, which trade at P/E multiples of 17 and EV/Sales of 0.4 and 0.3, respectively. The company benefits from multiple catalysts that could unlock significant upside.

Kroger’s failed acquisition of Albertsons triggered a potential $600 million breakup fee, equating to roughly 6% of ACI’s stock price, providing immediate value to shareholders. Additionally, Albertsons has an authorized share repurchase program of up to $2 billion, around 20% of outstanding shares, and the company has already repurchased 14.2 million shares at $22 for $314.8 million, with the potential to accelerate repurchases at current lower prices, further boosting earnings per share.

The 2024 earnings decline to $1.64 from $2.23 in 2023 reflects one-time costs from the failed merger rather than fundamental weakness, suggesting normalized earnings could support a fair value of $28–$30 per share, over 60% upside, assuming a P/E of 17 or EV/Sales of 0.3 based on peers.

Additional upside could come from Kroger’s breakup fee, further share repurchases reducing outstanding stock, operational leverage now that merger-related costs are behind them, and potential strategic interest, as Goldman Sachs identified Albertsons as a top 48 M&A candidate with a 15–30% probability. These factors combine to make Albertsons an undervalued, cash-generative, and defensive play with multiple levers for significant shareholder returns.

Previously we covered a bullish thesis on Target Corporation (TGT) by LongYield in May 2025, which highlighted the company’s digital momentum, cost control, omnichannel capabilities, and strong capital deployment despite near-term sales and EPS weakness. The company's stock price has depreciated approximately by 5.06% since our coverage. The thesis still stands as Target’s strategic investments support long-term recovery. Staniel_andy shares a similar approach but emphasizes Albertsons’ undervaluation, defensive positioning, and potential upside from M&A catalysts.

Albertsons Companies, Inc. is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 49 hedge fund portfolios held ACI at the end of the second quarter which was 52 in the previous quarter. While we acknowledge the potential of ACI as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

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Disclosure: None.