Identical sales are barely growing. Fiscal 2026 profit of about $5.20 a share already sits at twelve times. Next year I model $5.55 at the same multiple, a $67 stock including the dividend.
Key points
- 0.2% identical sales excluding fuel in the second quarter, with full-year guidance cut to 0.2%, 0.8%.
- $5.10, $5.30 adjusted EPS still guided for fiscal 2026; the midpoint is about 12 times the $62.98 share.
- 7%, 11% EPS growth is the new 2027, 2029 target, mostly from fewer shares, not faster grocery growth.
The call
The price requires about $5.20 of fiscal 2026 earnings and a twelve-times multiple, plus the 2.9% dividend, to merely match the market. Identical sales have stalled, and operating profit in the latest quarter declined.
I believe next-year earnings reach about $5.55 a share as buybacks continue and digital mix helps a little. Twelve times that is a $67 stock, a market-like return from $63 including the dividend. The market is about right.
Adjusted EPS and identical-sales growth- Adj. EPS ($)
- ID sales ex-fuel (%)
Company releases through Q2 FY26; identical sales exclude fuel. As of Oct 20, 2026.
Valuation
| Item | Figure |
|---|
| FY26 adj. EPS (midpoint of guide) | $5.20 a share |
| FY27E adj. EPS (mine) | $5.55 a share |
| Multiple | 12 times |
| 12-month target | $67 |
| Dividend last 12 months | $1.83 a share |
| Implied total return from $62.98 | about 9% |
Grocery names with slow unit growth trade near twelve times forward earnings. Upside needs sales to reaccelerate; downside is a lost Albertsons case or another sales cut. The spread is modest, so the rating is hold.
Risks
- Identical sales stay near zero and force another profit cut; watch the third-quarter ID-sales print.
- Albertsons trial awards a large cash judgment; watch docket filings and any reserve.
- Giant Eagle clearance slips or terms worsen; watch FTC comments and the 10-Q note.
What would change my mind
A quarter of identical sales excluding fuel above 2% with operating profit up year over year would support a higher multiple.