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Albertsons has had an up-and-down relationship with the stock market, first filing to go public in 2015 before hitting a long pause button. But the 80-year-old supermarket chain followed through on its second attempt in late June when shares hit brokerage accounts right around the $16 mark.
Albertsons is listed on the New York Stock Exchange under the ticker symbol ACI, and investors are grabbing their portions of 50 million available shares.
INVESTMENT PRODUCTS: NOT A DEPOSIT • NOT FDIC INSURED • NO BANK GUARANTEE • MAY LOSE VALUE
While the company had initially set its sights a little higher, targeting 65.8 million shares between $18 and $20, a bright spot of the Albertsons IPO is its plan to pay a quarterly dividend of about $0.40 per share, representing 2.5%.
In the supermarket world, Albertsons trails only Kroger in its physical presence across the nation, though nontraditional competitor Walmart also has more stores. In addition to the Albertsons brand, the company owns Safeway, Vons, Jewel-Osco, Acme Markets, Shaw’s and Tom Thumb stores, among others, across the West, Southwest, Northeast and Chicago metropolitan area.
Moving beyond its 2015 merger with Safeway, Albertsons is focused on in-store, curbside, online and mobile grocery shopping that’s “easy, exciting and friendly,” according to its stock prospectus.
Financially, several performance measures are trending up, including identical sales; net income; adjusted earnings before interest, taxes, depreciation and amortization (EBITDA); and cumulative adjusted free cash flow.
However, there’s risk in any investment. Among the particular risks for Albertsons are:
Albertsons appears to be in a league of its own. Kroger rose from penny-stock status decades ago to a current stock price of around $33, and Publix is a private family business.
But here’s how other somewhat related stocks performed after coming out the gates:
Reynolds Consumer Products (REYN), the most recent of these comparables, went public on January 31st. From its $26 offering price, the maker of Reynolds Wrap saw plenty of volatility. Its stock price spiked to nearly $32 before COVID-19 panic selling brought it down as low as $21.61, but it has since rebounded to new highs approaching $36.
Grocery Outlet (GO), a much smaller value-focused grocer primarily located in the West, began trading publicly on the less popular Nasdaq Global Select Market exchange in June 2019 by leap-frogging its IPO price of $22 per share and exchanging instead for around $29. From there, it went on to double in just two months before settling back to roughly $32. GO didn’t crash with the rest of the market in March and has risen with the stock market rebound to about $39.
Sprouts Farmers Markets (SFM) debuted in the fall of 2013 with an $18 IPO, but public trading opened closer to $40. After a relatively quick spike just shy of $50, SFM has steadily declined over the years, bouncing between about $18 and $28 since mid-2015.
US Foods (USFD), a food-service distributor rather than a retailer, went public in mid-2016 and saw its price hover in the low $20s until December of that year, when it broke out on a steady climb to $40 by mid-2018. It peaked just past $43 last September but crashed hard this March, when the coronavirus pandemic largely halted public food service. USFD lost as much as 80% of its value and is now at about $19.
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