Albertsons Tops 3Q Results As Online Sales Pop 225%

Albertsons Cos. reported better-than-expected 3Q results, driven by strong growth in digital sales and pandemic-led stockpiling of groceries. Shares of the grocery chain operator closed 2.1% higher on Tuesday.

Albertsons (ACI) reported adjusted earnings of $0.66 per share, which surpassed analysts’ expectations of $0.42 and jumped 175% year-on-year.

The company’s 3Q revenues increased 9.2% to $15.41 billion year-on-year and beat Street estimates of $15.37 billion. Identical sales rose 12.3% year-over-year fueled primarily by a 225% surge in digital sales. (See ACI stock analysis on TipRanks)

Albertsons raised its FY20 outlook. The company now projects identical sales to grow 16.5% in FY20, up from its previous forecast of a 15.5% increase. Adjusted EPS is estimated to generate $3.05-$3.15, up from the earlier guidance range of $2.75-$2.85.

Following the earnings release, Oppenheimer analyst Rupesh Parikh raised the stock’s price target to $20 (17% upside potential) from $18 and reiterated a Buy rating.

In a note to investors, Parikh wrote, “Investor sentiment has turned increasingly negative toward grocers lately given prospects for more difficult comparisons and money flows to more cyclical parts of retail. ACI’s short interest in the latest reading increased to 28% of the float. We expect ACI shares to move higher on the stronger performance, but the ride likely turns bumpier going forward with ID (Identical) sales trends likely turning negative soon.”

Meanwhile, the rest of the Street has cautiously optimistic outlook on the stock with a Moderate Buy analyst consensus. That’s based on 3 Buys, 3 Holds and 1 Sell. The average analyst price target of $18.71 implies upside potential of about 9.4% to current levels. Shares have gained 10.7% since the stock’s public listing on Jun. 26, 2020.

Furthermore, the stock scores a bullish sentiment call from financial bloggers.

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