Albertsons: huge potential upside to the initial PO price

Here’s a Thought! 29 June, 2020, by Vladimir Rojankovski, Chief Analyst, Grand Capital
The fourth largest U.S. food chain Albertsons has announced the launch of a road show related to the upcoming IPO. The IPO, which is likely to begin late next week, plans to raise about $1.25bn in the company's valuation of about $19bn if the target range per share is in the middle of $18 to $20. Founded in 1939 and owned since 2006 by a group of private equity funds led by Cerberus Capital, Albertsons had previously made its first internal IPO in 2015 in line with the then market conditions.
Over the past few quarters, stores’ sales growth has picked up, which is surprising - especially during the Coronavirus epidemic, although some portion of growth was affected by the closure of some stores. With an EPS (earnings per share) of 80 cents, an average IPO price of $19 per share and an average company valuation of $19 billion, the market capitalization will be in the order of $11 billion and the forecast P/E will be in the region of only 4.2 meaning a huge potential upside to the initial PO price.