Albertson’s Inc.
Devon Banning
ACG2021-080
Albertson’s is in food-drug retail chain. It is traded on the New York Stock
exchange as well as the Pacific Stock exchange. It is a very stable company and
is one of the largest in comparison to its competitors. It praises its self on
excellent quality, service, and customer satisfaction. It has been in business for
many years and continues to grow, eventually the will be operating in all 50
states. I feel it is a great company and a solid investment with little risk.
www.albertsons.com
Introduction
Chief Executive Officer: Larry Johnston
Location: 250 Parkcenter Blvd.
P.O. Box 20
Boise, Idaho 83726
Ending date latest fiscal year: 1/29/04
Products/services provided: Albertson’s operates a combination of food-drug
stores, conventional supermarkets, and warehouse stores. It is one of the largest
retail food and drug chains in the world.
Main geographic area of activity: Albertson’s has operations in thirty-seven states
across the US, mostly in the central and western parts of the United States.
Audit Report
Independent Auditors: Deloitte & Touche LLP
Comments about company: The auditors basically stated that Albertson’s
accounting principals were in compliance with GAAP.
Stock Market Information
Recent Price: $22.90
12 month trading range: $21.57 to $27.07
Dividend per share: 0.926
Date of above information: 2/1/05
Opinion about company stock: According to analyst Albertson’s in a strong
investment and is a strong company. It’s not a risky stock so returns are not huge
but it is a reliable company. I would hold it.
Industry Information and Future Plans
Albertson’s is in the retail grocery sector of business. It is among one of
the largest with stores covering most of the United States. The grocery industry is
strong, it’s not going to give you huge returns for investments purposes but its
stability makes it a solid bet. Albertson’s owns similar stores under different
names such as Acme, Jewel-Osco, Osco Drug, Sav-on, and Shaws.
Albertson’s main focuses in the years to come are driving cost out of the
business, differentiating there asset profile, and re-investing heavily in pricing
and promotions to give customers a better value offering and growing market
share. The Ceo commented on it being a tough year for the food-drug industry
but there performance has been encouraging.
Albertson’s also just renewed a 500 million dollar stock purchase program
that gives them the power to buy back there stock over the next year at
management’s discretion. www.finance.yahoo.com, www.forbes.com/markets
Income Statement
Format: multi-step
*(#’s in thousands) 2004 2003
Gross Profit 10,130,000 10,383,000
Income from Oper. 1,318,000 1,817,000
Net Income 556,000 485,000
Comments: Both gross profit and income from operations decreased within the
last year while net income increased.
Balance Sheet
*(#’s in thousands) 2004 2003
Assets 15,394,000 15,211,000
Liabilities 10,013,000 10,014,000
Stk. Holders Equity 5,381,000 5,197,000
Total 15,394,000 15,211,000
Comments: Within the past two years there were no significant increases or
decreases with the balance sheet accounts. Assets and Stockholders both
increased slightly.
Cash Flow Statement
*(#’s in thousands) 2004 2003
Cash Flow from Oper. 1,545,000 2,063,000
Net Income 556,000 485,000
Cash flow from operations was greater than net income for the past two years.
Albertson’s is growing through investment activities such as buying property,
plant and equipment. Also through buying and opening more stores around the
country.
Albertson’s primary source of financing is long-term loans; it makes up almost
all of there financing.
Overall cash has increased for Albertson’s over the past two years.
Accounting Policies
For Albertson’s there are no significant accounting policies related to revenue
recognition, short-term investments, cash, inventories, or property and
equipment.
Since there were no significant accounting policies I did not find any specific
notes on the financial statements.
Financial Analysis Liquidity Ratio
Working Capital: 734,000 (2004), 820,000 (2003)
Current Ratio: 1.19 (2004), 1.23 (2003)
Measure of short-term debt-paying ability
Receivable Turnover: .83 (2004), .72 (2003)
Measure of relative size of accounts receivable and effectiveness of credit
policies
Average Days’ Sales Uncollected: 439 (2004), 506 (2003)
Measure of average days taken to collect receivables
Inventory Turnover: 8.16 (2004), 8.14 (2003)
Measures of relative size of inventory
Average Days’ Inventory On Hand: 44.7 (2004), 44.8 (2003)
Measure of average days taken to sell inventory
Financial Analysis Profitability Ratios
Profit Margin: 1.5% (2004), 1.3% (2003)
Measures net income produced by each dollar of sales
Asset Turnover: 2.3 (2004), 2.32 (2003)
Measures how efficiently assets are used to produce sales
Return on Assets: 3.6% (2004), 3.1% (2003)
Measure of overall earning power or profitability
Return on Equity: 10.5% (2004), 9.1% (2003)
Measure of the profitability of stockholders investments
Financial Analysis Solvency Ratio
Debt to Equity: 1.8 (2004), 1.89 (2003)
Measure of capital structure and leverage
Financial Analysis Market Strength Ratios
Price/Earnings Per Share: 25.12 (2004), 24.48 (2003)
Measure of investor confidence in a company
Dividend Yield: 3.27 (2004), 3.19 (2003)
Measure of a stock’s current return to an investor