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Is It Wise to Buy Grocery Outlet (GO) Ahead of Q1 Earnings?
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As Grocery Outlet Holding Corp. (GO - Free Report) gears up to unveil its first-quarter 2024 earnings results on May 7 after market close, investors are contemplating whether now is the opportune moment to buy into this grocery chain.
Investors considering the addition of Grocery Outlet ahead of its earnings release may find compelling reasons to do so despite the projected decrease in earnings. According to the Zacks Consensus Estimate, there is an expected increase in the top line, indicating a 6.1% rise in revenues to $1,025 million compared to the previous year. This upward trajectory in revenue generation demonstrates GO's potential to capture market share and leverage consumer demand.
While the Zacks Consensus Estimate suggests a decline of 33.3% in earnings per share to 18 cents due to challenges related to systems integration efforts, it also presents an opportunity for savvy investors to capitalize on potential market mispricing. The company's robust revenue growth underscores the underlying strength of its business model, which could lead to improved profitability over the long term as operational efficiencies are optimized and cost management strategies are refined.
Investors with a forward-looking perspective may view the current drop in earnings as a temporary setback, positioning themselves to benefit from the company's growth prospects and potential stock price appreciation following the earnings release.
Broader Picture Looks Bullish
Grocery Outlet is strategically positioned, thanks to its distinctive business model that features opportunistic sourcing and an Independent Operator structure. This unique approach sets the company apart from conventional players. Grocery Outlet provides customers with quality, name-brand consumables and fresh products at exceptional value. The company's product offering is dynamic, with a constant rotation of opportunistic products complemented by everyday staple items.
The company's growth strategy is multifaceted, focusing on diverse product assortments, targeted marketing and e-commerce initiatives. Collaborations with delivery platforms like Instacart, DoorDash and Uber Technologies provide customers with convenient options, further cementing Grocery Outlet's reputation as a customer-centric retailer. Additionally, strategic initiatives such as the rollout of the personalization app and the new private label program are likely to drive higher customer engagement and basket size, leading to increased sales volume.
The acquisition of United Grocery Outlet ("UGO") signals Grocery Outlet's ambition to expand its footprint into key markets across the Southeastern United States. With 40 stores and a distribution center, UGO aligns seamlessly with Grocery Outlet's vision of offering unparalleled value to customers. This strategic move not only broadens Grocery Outlet's reach but also positions the company for accelerated growth and market penetration.
With plans to open 55-60 net new stores in 2024, including the addition of UGO stores and new locations in existing markets, the company is poised for significant expansion. Anticipating a return to an annual unit growth rate of 10%, Grocery Outlet is actively pursuing opportunistic real estate deals.
With its focus on delivering exceptional value to customers and its relentless pursuit of growth opportunities, Grocery Outlet is well-positioned to capitalize on emerging trends and drive shareholder value.
Grocery Outlet Holding Corp. Price, Consensus and EPS Surprise
Grocery Outlet exhibits a forward 12-month price-to-earnings ratio of 21.22, above the industry’s average of 17.85 but significantly below its five-year high of 35.32. This suggests that while the current valuation is above the industry average, there's a significant gap from its historical high, indicating potential room for growth. Investors may view this as an opportunity, considering Grocery Outlet's strong market position and potential for future performance improvements. The current Value Score of B validates this view.
Recent market movements show Grocery Outlet's shares rising 3.9% in the past three months against the industry’s decline of 0.8%. Trading at $25.71, shares of Grocery Outlet are likely to gain momentum, as our proven model predicts that the company is likely to beat earnings estimates in the impending release.
The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat, which is the case here. Grocery Outlet has an Earnings ESP of +4.27% and carries a Zacks Rank #2. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
What’s More?
A look at the road ahead of Grocery Outlet paints an encouraging picture. The Zacks Consensus Estimate for sales for the current and next fiscal year, standing at $4.35 billion and $4.73 billion, indicates year-over-year growth of 9.7% and 8.7%, respectively. Similarly, the consensus estimate for earnings per share is pegged at $1.18 and $1.28 for the same periods, which suggests an increase of 10.3% and 8.4%, respectively.
Other Stocks With the Favorable Combination
Performance Food Group (PFGC - Free Report) currently has an Earnings ESP of +1.56% and a Zacks Rank #2. The company’s third-quarter fiscal 2024 top line is anticipated to advance year over year. The consensus mark for revenues is pegged at $14.21 billion, which indicates an increase of 3.2% from the figure reported in the year-ago quarter. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for earnings of 83 cents a share is flat compared with the year-ago quarter. Performance Food Group has a trailing four-quarter earnings surprise of 4.8%, on average.
Ross Stores (ROST - Free Report) currently has an Earnings ESP of +0.34% and carries a Zacks Rank #3. The Zacks Consensus Estimate for first-quarter fiscal 2024 earnings per share is pegged at $1.34, which suggests an increase of 22.9% year over year.
Ross Stores’ top line is expected to ascend year over year. The Zacks Consensus Estimate for quarterly revenues is pegged at $4.82 billion, which implies a jump of 7.3% from the figure reported in the prior-year quarter. ROST has a trailing four-quarter earnings surprise of 9.1%, on average.
Ollie's Bargain (OLLI - Free Report) currently has an Earnings ESP of +0.77% and a Zacks Rank of 3. The company is likely to register a rise in the bottom line when it reports first-quarter fiscal 2024 numbers. The Zacks Consensus Estimate for quarterly earnings per share of 65 cents implies an increase of 32.7% from the year-ago reported number.
Ollie's Bargain’s top line is expected to ascend year over year. The Zacks Consensus Estimate for quarterly revenues is pegged at $503.8 million, which calls for an increase of 9.7% from the prior-year quarter. OLLI has a trailing four-quarter earnings surprise of 7.3%, on average.
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Is It Wise to Buy Grocery Outlet (GO) Ahead of Q1 Earnings?
As Grocery Outlet Holding Corp. (GO - Free Report) gears up to unveil its first-quarter 2024 earnings results on May 7 after market close, investors are contemplating whether now is the opportune moment to buy into this grocery chain.
Investors considering the addition of Grocery Outlet ahead of its earnings release may find compelling reasons to do so despite the projected decrease in earnings. According to the Zacks Consensus Estimate, there is an expected increase in the top line, indicating a 6.1% rise in revenues to $1,025 million compared to the previous year. This upward trajectory in revenue generation demonstrates GO's potential to capture market share and leverage consumer demand.
While the Zacks Consensus Estimate suggests a decline of 33.3% in earnings per share to 18 cents due to challenges related to systems integration efforts, it also presents an opportunity for savvy investors to capitalize on potential market mispricing. The company's robust revenue growth underscores the underlying strength of its business model, which could lead to improved profitability over the long term as operational efficiencies are optimized and cost management strategies are refined.
Investors with a forward-looking perspective may view the current drop in earnings as a temporary setback, positioning themselves to benefit from the company's growth prospects and potential stock price appreciation following the earnings release.
Broader Picture Looks Bullish
Grocery Outlet is strategically positioned, thanks to its distinctive business model that features opportunistic sourcing and an Independent Operator structure. This unique approach sets the company apart from conventional players. Grocery Outlet provides customers with quality, name-brand consumables and fresh products at exceptional value. The company's product offering is dynamic, with a constant rotation of opportunistic products complemented by everyday staple items.
The company's growth strategy is multifaceted, focusing on diverse product assortments, targeted marketing and e-commerce initiatives. Collaborations with delivery platforms like Instacart, DoorDash and Uber Technologies provide customers with convenient options, further cementing Grocery Outlet's reputation as a customer-centric retailer. Additionally, strategic initiatives such as the rollout of the personalization app and the new private label program are likely to drive higher customer engagement and basket size, leading to increased sales volume.
The acquisition of United Grocery Outlet ("UGO") signals Grocery Outlet's ambition to expand its footprint into key markets across the Southeastern United States. With 40 stores and a distribution center, UGO aligns seamlessly with Grocery Outlet's vision of offering unparalleled value to customers. This strategic move not only broadens Grocery Outlet's reach but also positions the company for accelerated growth and market penetration.
With plans to open 55-60 net new stores in 2024, including the addition of UGO stores and new locations in existing markets, the company is poised for significant expansion. Anticipating a return to an annual unit growth rate of 10%, Grocery Outlet is actively pursuing opportunistic real estate deals.
With its focus on delivering exceptional value to customers and its relentless pursuit of growth opportunities, Grocery Outlet is well-positioned to capitalize on emerging trends and drive shareholder value.
Grocery Outlet Holding Corp. Price, Consensus and EPS Surprise
Grocery Outlet Holding Corp. price-consensus-eps-surprise-chart | Grocery Outlet Holding Corp. Quote
Valuation Picture & Zacks Model
Grocery Outlet exhibits a forward 12-month price-to-earnings ratio of 21.22, above the industry’s average of 17.85 but significantly below its five-year high of 35.32. This suggests that while the current valuation is above the industry average, there's a significant gap from its historical high, indicating potential room for growth. Investors may view this as an opportunity, considering Grocery Outlet's strong market position and potential for future performance improvements. The current Value Score of B validates this view.
Recent market movements show Grocery Outlet's shares rising 3.9% in the past three months against the industry’s decline of 0.8%. Trading at $25.71, shares of Grocery Outlet are likely to gain momentum, as our proven model predicts that the company is likely to beat earnings estimates in the impending release.
The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat, which is the case here. Grocery Outlet has an Earnings ESP of +4.27% and carries a Zacks Rank #2. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
What’s More?
A look at the road ahead of Grocery Outlet paints an encouraging picture. The Zacks Consensus Estimate for sales for the current and next fiscal year, standing at $4.35 billion and $4.73 billion, indicates year-over-year growth of 9.7% and 8.7%, respectively. Similarly, the consensus estimate for earnings per share is pegged at $1.18 and $1.28 for the same periods, which suggests an increase of 10.3% and 8.4%, respectively.
Other Stocks With the Favorable Combination
Performance Food Group (PFGC - Free Report) currently has an Earnings ESP of +1.56% and a Zacks Rank #2. The company’s third-quarter fiscal 2024 top line is anticipated to advance year over year. The consensus mark for revenues is pegged at $14.21 billion, which indicates an increase of 3.2% from the figure reported in the year-ago quarter. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for earnings of 83 cents a share is flat compared with the year-ago quarter. Performance Food Group has a trailing four-quarter earnings surprise of 4.8%, on average.
Ross Stores (ROST - Free Report) currently has an Earnings ESP of +0.34% and carries a Zacks Rank #3. The Zacks Consensus Estimate for first-quarter fiscal 2024 earnings per share is pegged at $1.34, which suggests an increase of 22.9% year over year.
Ross Stores’ top line is expected to ascend year over year. The Zacks Consensus Estimate for quarterly revenues is pegged at $4.82 billion, which implies a jump of 7.3% from the figure reported in the prior-year quarter. ROST has a trailing four-quarter earnings surprise of 9.1%, on average.
Ollie's Bargain (OLLI - Free Report) currently has an Earnings ESP of +0.77% and a Zacks Rank of 3. The company is likely to register a rise in the bottom line when it reports first-quarter fiscal 2024 numbers. The Zacks Consensus Estimate for quarterly earnings per share of 65 cents implies an increase of 32.7% from the year-ago reported number.
Ollie's Bargain’s top line is expected to ascend year over year. The Zacks Consensus Estimate for quarterly revenues is pegged at $503.8 million, which calls for an increase of 9.7% from the prior-year quarter. OLLI has a trailing four-quarter earnings surprise of 7.3%, on average.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.