Albertsons Companies, Inc. (NYSE:ACI) just released its quarterly report and things are looking bullish. It was overall a positive result, with revenues beating expectations by 3.7% to hit US$21b. Albertsons Companies also reported a statutory profit of US$0.78, which was an impressive 28% above what the analysts had forecast. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.
Taking into account the latest results, Albertsons Companies' 16 analysts currently expect revenues in 2022 to be US$67.1b, approximately in line with the last 12 months. Per-share earnings are expected to leap 41% to US$1.85. Before this earnings report, the analysts had been forecasting revenues of US$66.1b and earnings per share (EPS) of US$1.83 in 2022. The consensus analysts don't seem to have seen anything in these results that would have changed their view on the business, given there's been no major change to their estimates.
The consensus price target rose 13% to US$23.75despite there being no meaningful change to earnings estimates. It could be that the analystsare reflecting the predictability of Albertsons Companies' earnings by assigning a price premium. The consensus price target is just an average of individual analyst targets, so – it could be handy to see how wide the range of underlying estimates is. Currently, the most bullish analyst values Albertsons Companies at US$30.00 per share, while the most bearish prices it at US$15.00. This is a fairly broad spread of estimates, suggesting that analysts are forecasting a wide range of possible outcomes for the business.
Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. We would highlight that sales are expected to reverse, with a forecast 2.2% annualised revenue decline to the end of 2022. That is a notable change from historical growth of 5.7% over the last three years. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 5.1% per year. So although its revenues are forecast to shrink, this cloud does not come with a silver lining – Albertsons Companies is expected to lag the wider industry.
The Bottom Line
The most obvious conclusion is that there's been no major change in the business' prospects in recent times, with the analysts holding their earnings forecasts steady, in line with previous estimates. Fortunately, the analysts also reconfirmed their revenue estimates, suggesting sales are tracking in line with expectations – although our data does suggest that Albertsons Companies' revenues are expected to perform worse than the wider industry. There was also a nice increase in the price target, with the analysts clearly feeling that the intrinsic value of the business is improving.
Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. We have forecasts for Albertsons Companies going out to 2024, and you can see them free on our platform here.
You should always think about risks though. Case in point, we've spotted 4 warning signs for Albertsons Companies you should be aware of.
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