Albertsons: Stringent Competition Should Offset Productivity Gains, but Shares Still Look Attractive

We raise our fair value estimate on no-moat Albertsons to $28 per share, from $27, primarily due to a slight increase to our stage two growth outlook (we model flat earnings before interest growth compared with a 2% decline previously). We currently view shares as undervalued and credit Albertsons’ management team for prioritizing operational improvements at the store and supply chain level while balancing investments in its digital fulfillment capabilities, helping to drive modest margin expansion in recent years.