Albertsons' upbeat FQ2 results tied to gains in low margin businesses - analysts

[An Albertsons supermarket in Boise, ID, United States]
JHVEPhoto

Albertsons Companies (NYSE:ACI [https://seekingalpha.com/symbol/ACI]) delivered better-than-feared results for the fiscal second quarter [https://seekingalpha.com/news/4503835-albertsons-fq2-sales-beat-expectations-on-digital-and-pharmacy-gains-raises-fy25-guidance#scroll_comments], launching shares higher in Tuesday’s after-hours trading.

However, analysts note that the bulk of its above-consensus sales can be attributed to its low margin pharmacy business and digital business, while the possibility for further acceleration will be hampered by the competitive environment.

“Margin pressures should continue,” Wells Fargo’s Simeon Gutman says, with dilution from a mix shift to pharmacy and ecommerce the biggest drivers.

Gutman and Morgan Stanley’s Edward Kelly both point to the intensifying competitive landscape as the primary headwind for Albertsons, despite the “value-seeking” consumer which favors Albertsons (NYSE:ACI [https://seekingalpha.com/symbol/ACI]).

“We believe adjusted EBITDA is set to stabilize in FY25 but expect any growth in FY26 and beyond to be muted and subject to the competitive environment, which is intensifying,” Gutman said, singling out Amazon (AMZN [https://seekingalpha.com/symbol/AMZN]), Walmart (WMT [https://seekingalpha.com/symbol/WMT]), and Costco (COST [https://seekingalpha.com/symbol/COST]).

Morgan Stanley maintains an Equal Weight rating on Albertsons (NYSE:ACI [https://seekingalpha.com/symbol/ACI]) to reflect a balanced risk/reward and stabilizing EBITDA in FY2, but lowered EPS estimates for FY25 by 11% to $2.11. For FY26 and FY27, Gutman now expects EPS of $2.22, and $2.39, growth of 5% and 7% from the prior estimates.

Analysts are largely split on Albertsons (ACI [https://seekingalpha.com/symbol/ACI]) with Wall Street analysts rating the stock as a Buy and Seeking Alpha’s Quant rating view Albertsons a Hold. Seeking Alpha authors, however, see Albertsons (ACI [https://seekingalpha.com/symbol/ACI]) as a Strong Buy with a score of 4.50 out of 5.

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* Albertsons Companies, Inc. (ACI) Q2 2025 Earnings Call Transcript [https://seekingalpha.com/article/4829820-albertsons-companies-inc-aci-q2-2025-earnings-call-transcript]
* Albertsons: Fighting Off Macro Negatives With Inventive E-Commerce Surge [https://seekingalpha.com/article/4821744-albertsons-fighting-off-macro-negatives-with-inventive-e-commerce-surge]
* Albertsons raises FY25 EPS guidance to $2.06–$2.19 as digital and pharmacy momentum accelerates [https://seekingalpha.com/news/4504003-albertsons-raises-fy25-eps-guidance-to-2_06-2_19-as-digital-and-pharmacy-momentum-accelerates]
* Albertsons' FQ2 sales beat expectations on digital and pharmacy gains, raises FY25 guidance [https://seekingalpha.com/news/4503835-albertsons-fq2-sales-beat-expectations-on-digital-and-pharmacy-gains-raises-fy25-guidance]