As Grocery Outlet Holding Corp. (GO) prepares to announce its third-quarter fiscal 2024 earnings results on Nov. 5 after market close, investors are closely watching to see how the company has performed amid challenges and growth opportunities in the competitive grocery sector.The Zacks Consensus Estimate for revenues is pegged at $1.1 billion, suggesting a solid 10% improvement over the prior-year period’s actual. However, the company’s bottom line is expected to face pressure. The Zacks Consensus Estimate ...

Grocery Outlet Holding Corp. (GO) is currently trading at a forward 12-month price-to-earnings (P/E) ratio of 15.29, which is notably lower than the industry’s average of 18.69 and the S&P 500’s ratio of 22.22. At a first glance, this discount may suggest that GO is undervalued, potentially offering investors a chance to buy at a bargain. A lower P/E ratio often signals that a stock may be priced attractively relative to its earnings potential, which can be appealing to value-focused investors.Image Source: ...

Core Viewpoint - Grocery Outlet Holding Corp. is set to release its financial results for Q3 of fiscal 2024 on November 5, 2024, after market close, indicating ongoing transparency and engagement with investors [1]. Group 1: Financial Results Announcement - The financial results for the third quarter of fiscal 2024 will be released after market close on November 5, 2024 [1]. - A conference call to discuss the results will be held at 4:30 PM ET (1:30 PM PT) on the same day [1]. - Investors and analysts can join the call by dialing (877) 407-9208 approximately 10 minutes prior to the start [1]. Group 2: Access to Conference Call - A live audio webcast of the conference call will be available online [1]. - A taped replay of the conference call will be accessible within two hours after the call concludes, available for approximately two weeks [1]. Group 3: Company Overview - Grocery Outlet is a high-growth, extreme value retailer based in Emeryville, California, specializing in quality, name-brand consumables and fresh products [2]. - The company operates more than 520 stores across various states, including California, Delaware, Idaho, Maryland, Nevada, New Jersey, Ohio, Oregon, Pennsylvania, and Washington [2]. - Additionally, Grocery Outlet includes United Grocery Outlet stores, which are located in states such as Alabama, Georgia, Kentucky, North Carolina, Tennessee, and Virginia [2].

Grocery Outlet Holding Corp. (GO) has encountered a notable resistance level, prompting caution among investors from a technical standpoint. GO has been trading below both the 200-day and 50-day simple moving averages (SMA) for quite some time now, suggesting a bearish trend. 30.00 25.00 SMA (200): 23.2286 20.00 SMA (50): 18.2226 GO: 17.55 15.00 Volume · GO: 2 435 788 Monday, Sep 30, 2024 Jul '24 Aug 24 Nov '23 Jun '24 Image Source: Zacks Investment Research Closing at $17.55 yesterday, GO remains below its ...

Grocery Outlet Holding Corp. (GO) has experienced a pullback in its share performance losing nearly half of its value and falling far below its 52-week high of $30.33, touched in last September. Currently trading at $16.27, the stock has seen a 46.4% drop from its peak. Over the past three months, Grocery Outlet shares have plunged 21.2%, underperforming the broader industry, which has risen 9.4% and the S&P 500, which posted a 2.7% return during the same period. The recent decline in share performance is a ...

Core Viewpoint - Grocery Outlet Holding Corp. has faced significant challenges in 2024, with a year-to-date stock price decline of 37.1%, contrasting with the broader industry and S&P 500 gains of 4.3% and 14.5% respectively [1][10]. Financial Performance - The company's gross margin was negatively impacted by new technology platforms, decreasing by 100 basis points to 30.9% in Q2 2024 [2][6]. - Selling, General and Administrative (SG&A) expenses surged by 11.4% to $323.1 million, primarily due to increased costs related to independent operator commissions, store occupancy, and incentives [7]. - The Zacks Consensus Estimate for earnings has decreased to 92 cents per share for the current fiscal year and $1.13 for the next fiscal year, reflecting a decline of 3.4% [4]. Stock Valuation - Grocery Outlet is currently trading at a forward 12-month Price to Earnings (P/E) ratio of 15.87X, which is lower than the industry average of 18.53X and the median of 28.19X, suggesting potential undervaluation [8]. Business Strategy - The company is enhancing its market presence through diverse product assortments, targeted marketing, and e-commerce strategies, including partnerships with Instacart, DoorDash, and Uber Technologies for same-day delivery [9]. - Grocery Outlet's unique business model focuses on opportunistic sourcing and an Independent Operator structure, providing quality products at significant discounts [8]. Management Outlook - Despite ongoing operational challenges, management remains optimistic about stabilizing performance in the latter half of the year, indicating a potential recovery [10][11].

Core Viewpoint - Grocery Outlet Holding Corp. reported mixed results for Q2 2024, with earnings declining year-over-year despite surpassing revenue expectations, indicating challenges ahead due to technology disruptions and a downward trend in estimates [2][3][12]. Financial Performance - Adjusted earnings were 25 cents per share, beating the Zacks Consensus Estimate of 20 cents but down from 32 cents in the previous year [3]. - Net sales reached $1,128.5 million, exceeding the Zacks Consensus Estimate of $1,109 million, representing an 11.7% year-over-year growth [3]. - Comparable store sales increased by 2.9%, driven by a 5.1% rise in transactions, partially offset by a 2.1% decline in average transaction size [4]. Margins and Costs - Gross profit rose 6.9% year-over-year to $349.2 million, but gross margin contracted by 140 basis points to 30.9% due to technology disruptions [5]. - Adjusted EBITDA was $67.9 million, down from $70.5 million in the prior year, with an adjusted EBITDA margin shrinking to 6% [5]. - SG&A expenses increased by 11.4% to $323.1 million, while as a percentage of net sales, they decreased by 10 basis points to 28.6% [6]. Store Expansion - The company opened 11 new stores during the quarter, bringing the total to 524 stores across 16 states, with plans to open 62-64 net new stores in 2024 [7]. Financial Outlook - Management projects 2024 net sales between $4.30 billion and $4.35 billion, compared to $3.97 billion in 2023, with expected comparable store sales growth of 3.5% [9]. - The company anticipates adjusted EBITDA between $252 million and $260 million for 2024, with adjusted earnings projected in the range of 89-95 cents per share [10]. - For Q3 2024, comparable store sales growth is expected to be approximately 1.5%, with a gross margin forecast of around 31% [11]. Estimate Trends - Consensus estimates have trended downward, with a significant shift of -20.88% noted over the past month [12]. - The stock currently holds a Zacks Rank 3 (Hold), indicating an expectation of in-line returns in the coming months [14]. Industry Comparison - Grocery Outlet operates within the Zacks Consumer Products - Staples industry, where competitor Kimberly-Clark reported a revenue decline of 2.1% year-over-year [15].

Investment Overview - Grocery Outlet Holding (NASDAQ:GO) has been rated as a sell due to uncertainty regarding same-store sales (SSS) performance and potential misses on FY24 guidance, leading to a decline in share price [2] - The company is expected to continue facing poor SSS growth in the near term as the trade-down motion has ended and competition in the industry is intensifying [2] 2Q24 Earnings - In 2Q24, GO reported net sales of $1.128 billion, reflecting an 11.7% year-over-year growth, with SSS growth at 2.9% [3] - Gross profit increased by 6.9% to $349.2 million, resulting in a gross margin of 30.9%, which is a 140 basis points decline from 2Q23 [3] - The EBIT margin decreased by 80 basis points from 3.9% in 2Q23 to 3.1% in 2Q24, influenced by a high tax rate of 32.5% compared to 30.7% in the previous year, leading to a net income decline of 17% from $24.1 million to $20 million [3] SSS Growth Challenges - SSS growth in 2Q24 was supported by lower pricing, which contributed negatively by -2.1%, while consumer traffic contributed positively by 5.1% [4] - The macroeconomic environment is less favorable for GO, with food at home inflation at only 1% year-to-date and real wage growth at 4-5%, reducing the incentive for consumers to trade down [4] - Management indicated a slowdown in traffic starting in June, with guidance for 3Q24 SSS growth at approximately 1.5%, indicating further deceleration [4] Competitive Environment - The end of the trade-down motion has led to increased competition, with competitors ramping up promotions, which negatively impacts GO's margins [5] - GO's management noted heightened promotional pressure from competitors throughout 2Q24, which is expected to continue [5] - GO's revenue of approximately $4.2 billion is significantly smaller compared to competitors like Kroger ($150 billion) and Walmart ($665 billion), limiting its ability to compete on pricing [5] Valuation - If GO continues to report poor SSS growth, its valuation is likely to face further pressure, with the forward PE ratio declining from approximately 27x to 18x over the past year [7] - Comparatively, Kroger and Albertsons Cos are valued at around 12x and 9x respectively, indicating potential for GO's valuation to decrease further [7] Conclusion - A sell rating is maintained for GO as the trade-down motion has largely ended and the demand environment is becoming more promotional [9] - SSS growth is expected to continue slowing, and the company's smaller scale relative to larger competitors puts profit margins at risk [9] - There is significant room for valuation decline, especially with ongoing earnings pressure anticipated [9]

Core Insights - Grocery Outlet Holding Corp. reported second-quarter 2024 results with both net sales and adjusted earnings exceeding Zacks Consensus Estimates, although earnings declined year-over-year [1][2][8] Financial Performance - Adjusted earnings were 25 cents per share, surpassing the Zacks Consensus Estimate of 20 cents but down from 32 cents in the same quarter last year [2] - Net sales reached $1,128.5 million, exceeding the Zacks Consensus Estimate of $1,109 million, representing an 11.7% year-over-year growth [2] - Comparable store sales increased by 2.9%, driven by a 5.1% rise in transaction numbers, partially offset by a 2.1% decline in average transaction size [3] Margins & Costs - Gross profit rose 6.9% year-over-year to $349.2 million, but gross margin contracted by 140 basis points to 30.9% due to technology implementation disruptions [4] - Adjusted EBITDA was $67.9 million, down from $70.5 million in the previous year, with an adjusted EBITDA margin shrinking by 100 basis points to 6% [4][5] - SG&A expenses increased by 11.4% to $323.1 million, while as a percentage of net sales, they decreased by 10 basis points to 28.6% [5] Store Expansion - The company opened 11 new stores during the quarter, alongside the acquisition of 40 stores from United Grocery Outlet, bringing the total to 524 stores across 16 states [6] - Grocery Outlet plans to open 62-64 net new stores in 2024, including 40 from the United Grocery Outlet acquisition and 22 to 24 new stores in existing markets [6] Other Financial Aspects - At the end of the quarter, Grocery Outlet had cash and cash equivalents of $67.1 million, long-term debt of $373.6 million, and stockholders' equity of $1,220.8 million [7] - Net cash provided by operating activities was $41.6 million, with capital expenditures of $40.2 million, and management anticipates capital expenditures of about $200 million for 2024 [7] Outlook - Management projects 2024 net sales between $4.30 billion and $4.35 billion, compared to $3.97 billion in 2023, with expected comparable store sales growth of 3.5% [8] - The company anticipates a full-year gross margin of 30.5%, down from a previous guidance of 31.3%, indicating an 80-basis point contraction from the prior year [8] - Adjusted EBITDA is expected to be between $252 million and $260 million, with adjusted earnings projected in the range of 89-95 cents per share [9]

Grocery Outlet Holding Corp. (GO) reported $1.13 billion in revenue for the quarter ended June 2024, representing a year-over-year increase of 11.7%. EPS of $0.25 for the same period compares to $0.32 a year ago. The reported revenue represents a surprise of +1.75% over the Zacks Consensus Estimate of $1.11 billion. With the consensus EPS estimate being $0.20, the EPS surprise was +25.00%. While investors scrutinize revenue and earnings changes year-over-year and how they compare with Wall Street expectatio ...