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    Albertsons (ACI): Reassessing Valuation After FDA Warning on Mishandled Infant Formula Recall

    Simply Wall St·12/20/2025 23:30:46
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    Albertsons Companies (ACI) is under fresh scrutiny after the FDA cited the grocer for leaving recalled ByHeart infant formula linked to a botulism outbreak on shelves, raising clear questions about recall controls and compliance.

    See our latest analysis for Albertsons Companies.

    The FDA letter lands at a tricky time for Albertsons, with a 1 year to date share price return of negative 11.34 percent and a 1 year total shareholder return of negative 8.03 percent, signaling fading near term momentum despite a still robust 5 year total shareholder return of 65.21 percent.

    If this safety scare has you reassessing your exposure to traditional grocers, it could be a good moment to explore healthcare stocks as potential long term compounders in a more defensive corner of the market.

    With the shares trading at a steep discount to analyst targets despite steady top line and earnings growth, the key question now is whether Albertsons is a contrarian value play or whether markets are correctly pricing in its risks and future growth.

    Most Popular Narrative Narrative: 26.2% Undervalued

    With Albertsons last closing at $17.43 versus a narrative fair value near $23.63, the valuation case leans heavily on its multi year transformation story.

    Modernization through technology investments such as automation, AI driven inventory/pricing, and centralized buying is streamlining operations, reducing labor and supply chain costs, and positioning the company for long term margin expansion and improved net earnings. Increasing penetration of private label and own brands (now at 25.7% of sales with a push to reach 30%+), along with targeted value investments, is driving higher margin sales, deepening brand loyalty, and contributing to gross margin stabilization over time.

    Read the complete narrative.

    Curious how modest sales growth, slight margin gains, and a richer future earnings multiple combine into that upside case? The full narrative explains the entire playbook in detail.

    Result: Fair Value of $23.63 (UNDERVALUED)

    Have a read of the narrative in full and understand what's behind the forecasts.

    However, persistent e commerce underperformance and rising labor costs could quickly erode margin gains and challenge the turnaround story now embedded in bullish expectations.

    Find out about the key risks to this Albertsons Companies narrative.

    Build Your Own Albertsons Companies Narrative

    If this view does not fully reflect your own thesis, or you would rather dig into the numbers yourself, you can build a personalized narrative in minutes: Do it your way.

    A great starting point for your Albertsons Companies research is our analysis highlighting 3 key rewards and 2 important warning signs that could impact your investment decision.

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    This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.