Core Insights - The article emphasizes the investment philosophy focused on small cap companies, highlighting the importance of identifying mispriced securities through understanding financial drivers and utilizing DCF model valuation [1]. Group 1: Investment Philosophy - The investment approach is not confined to traditional categories such as value, dividend, or growth investing, but rather considers all prospects of a stock to assess risk-to-reward [1].

Core Insights - Grocery Outlet Holding Corp. reported mixed results for Q3 2025, with net sales missing estimates but showing a year-over-year increase, while earnings exceeded estimates but declined from the previous year [1][3][9] Financial Performance - Adjusted earnings were 21 cents per share, beating the Zacks Consensus Estimate of 19 cents but down from 28 cents in the same quarter last year [3][9] - Net sales reached $1,168.2 million, falling short of the Zacks Consensus Estimate of $1,182 million, but reflecting a 5.4% year-over-year growth [3][9] - Comparable-store sales increased by 1.2%, supported by a 1.8% rise in transactions, but fell short of the anticipated 2% growth [4][9] Margin and Cost Analysis - Gross profit grew by 3% year over year to $355.1 million, with a gross margin contraction of 70 basis points to 30.4% [5][9] - SG&A expenses rose by 8.7% to $331 million, representing 28.3% of net sales, primarily due to new store costs and higher incentive compensation [6][9] - Adjusted EBITDA was $66.7 million, down 7.7% year over year, with the margin decreasing by 80 basis points to 5.7% [6][9] Store Expansion and Initiatives - The company added 13 new stores and closed two, bringing the total to 563 stores across 16 states, with plans to open 37 net new stores in 2025 [7][9] - A store refresh program was launched in select pilot stores, with plans to expand to 20 stores by year-end 2025 and at least 150 stores by the end of 2026 [8][9] Financial Health - At the end of the quarter, Grocery Outlet had cash and cash equivalents of $52.1 million, long-term debt of $481.5 million, and stockholders' equity of $1,198.6 million [9][10] - The company maintained a net leverage ratio of 1.8x adjusted EBITDA and had $175 million remaining borrowing capacity under its revolving credit facility [10][9] 2025 Outlook - The company revised its fiscal 2025 guidance, expecting net sales between $4.70 billion and $4.72 billion, and comparable-store sales growth of 0.6-0.9% [11][9] - Adjusted EBITDA is projected in the range of $258 million to $262 million, with adjusted earnings expected between 78 cents and 80 cents per share [12][9] - For Q4 2025, comparable-store sales growth is anticipated to be flat to 1%, with adjusted earnings projected between 21 cents and 23 cents per share [13][9] Market Performance - Grocery Outlet's shares fell 10% in after-hours trading following the earnings report, and the stock has declined 30.4% over the past three months compared to a 7.4% decline in the industry [2][14]

Core Points - U.S. stock futures are lower, with Dow futures falling over 50 points [1] - Super Micro Computer Inc reported disappointing first-quarter results, with earnings of 35 cents per share, missing the consensus estimate of 40 cents, and revenue of $5.01 billion, below the expected $5.99 billion [2] - Super Micro's revenue decreased from $5.93 billion in the same period last year [2] - The company's shares fell 9.2% to $43.12 in pre-market trading [2] Company-Specific Movements - Biohaven Ltd experienced a significant drop of 46.2% to $7.51 after receiving an FDA Complete Response Letter for VYGLXIA [4] - Trex Company Inc declined 31.9% to $32.02 following worse-than-expected third-quarter results and lowered FY25 sales guidance [4] - Soleno Therapeutics Inc fell 22.2% to $49.65 after reporting third-quarter results [4] - Axon Enterprise Inc's shares dropped 19.6% to $567.50 after mixed third-quarter results and an acquisition announcement [4] - Pinterest Inc dipped 18.8% to $26.69 after posting disappointing third-quarter earnings [4] - SSR Mining Inc fell 17.5% to $17.90 after its third-quarter results [4] - Uniqure NV's shares decreased by 15.8% to $25.61 after a prior gain [4] - Clover Health Investments Corp fell 15.5% to $2.97 after mixed third-quarter results [4] - Upstart Holdings Inc declined 15.3% to $39.15 after mixed results and lowered FY25 guidance [4] - Corsair Gaming Inc fell 12.4% to $6.59 following worse-than-expected third-quarter results [4] - Advanced Micro Devices, Inc. declined 5% to $237.80 despite reporting better-than-expected third-quarter results and projecting fourth-quarter revenue of approximately $9.6 billion [4]

Core Insights - Grocery Outlet is launching holiday promotions to help customers save up to 60% on their shopping, emphasizing affordability during the holiday season [1][2] Promotions and Offers - Holiday Wine Sales will offer 20% off all wine bottles from November 5–11 and December 12–14, featuring new wines under the Second Cheapest Wine™ brand priced at $4.99 per bottle [4] - A Turkey Deal will provide a frozen 14–16-pound Jenny-O turkey for $5.99 with a $50 purchase from November 12 to November 27, available in select states [7] - Customers can enter to win Free Groceries for a Year valued at $6,000 or Free Groceries for a Month valued at $500 by scanning their card in the Grocery Outlet app [7] Market Context - Recent polls indicate that 74% of Americans have seen their monthly household costs increase by at least $100, with some reporting increases as high as $749 [9] - Economic sentiment is low, with three out of four Americans rating economic conditions as fair or poor, primarily due to rising prices and personal expenses [10] Company Overview - Grocery Outlet is a high-growth, extreme value retailer with over 550 stores across multiple states, focusing on quality, name-brand consumables and fresh products [11]

Core Insights - Grocery Outlet Holding Corp. reported revenue of $1.17 billion for the quarter ended September 2025, reflecting a year-over-year increase of 5.4% [1] - The earnings per share (EPS) for the quarter was $0.21, down from $0.28 in the same quarter last year, but exceeded the consensus estimate of $0.19 by 10.53% [1] - The reported revenue was slightly below the Zacks Consensus Estimate of $1.18 billion, resulting in a revenue surprise of -1.16% [1] Financial Performance Metrics - Grocery Outlet's total store count reached 563, surpassing the four-analyst average estimate of 561 [4] - Comparable store sales growth was recorded at 1.2%, which is below the 1.9% average estimate from four analysts [4] - The company opened 13 new stores, exceeding the two-analyst average estimate of 9 [4] Stock Performance - Over the past month, Grocery Outlet's shares have returned -11.7%, contrasting with the Zacks S&P 500 composite's increase of +2.1% [3] - The stock currently holds a Zacks Rank 3 (Hold), suggesting it may perform in line with the broader market in the near term [3]

Core Insights - Grocery Outlet Holding Corp. reported quarterly earnings of $0.21 per share, exceeding the Zacks Consensus Estimate of $0.19 per share, but down from $0.28 per share a year ago [1] - The earnings surprise for this quarter was +10.53%, following a previous quarter where the company had a surprise of +35.29% [2] - The company posted revenues of $1.17 billion for the quarter ended September 2025, which was 1.16% below the Zacks Consensus Estimate, but an increase from $1.11 billion year-over-year [3] Earnings Performance - Over the last four quarters, Grocery Outlet has surpassed consensus EPS estimates three times [2] - The current consensus EPS estimate for the upcoming quarter is $0.24, with expected revenues of $1.26 billion, and for the current fiscal year, the estimate is $0.78 on $4.74 billion in revenues [8] Market Position - Grocery Outlet shares have declined approximately 8.8% since the beginning of the year, contrasting with the S&P 500's gain of 16.5% [4] - The Zacks Rank for Grocery Outlet is currently 3 (Hold), indicating expected performance in line with the market in the near future [7] Industry Context - The Consumer Products - Staples industry, to which Grocery Outlet belongs, is currently ranked in the bottom 18% of over 250 Zacks industries, suggesting potential challenges ahead [9] - Empirical research indicates a strong correlation between near-term stock movements and trends in earnings estimate revisions, which could impact Grocery Outlet's stock performance [6]

Financial Data and Key Metrics Changes - Net sales increased by 5.4% to $1.17 billion, with comparable store sales up by 1.2% [4][24] - Adjusted EBITDA was $67 million, exceeding guidance due to favorable tax impacts [5][27] - Gross profit rose by 3% to $355.1 million, with a gross margin of 30.4%, down 70 basis points year-over-year [25][26] - Net income decreased to $11.6 million, or $0.12 per diluted share, compared to $24.2 million, or $0.24 last year [27] Business Line Data and Key Metrics Changes - The company opened 13 new stores and closed 2, ending the quarter with 563 stores across 16 states [24] - Comparable store sales growth was driven by a 1.8% increase in transactions, partially offset by a 60 basis points decrease in average transaction size [25] Market Data and Key Metrics Changes - The company expects same-store sales growth for Q4 to be between flat and up 1% due to recent promotional adjustments [5][29] - The percentage of sales from electronic benefits transfer payments, largely related to SNAP benefits, was approximately 9% last year [29] Company Strategy and Development Direction - The company is focusing on four strategic imperatives: improving new store performance, securing top talent, addressing execution gaps, and enhancing execution at scale [6][19] - A store refresh program is being rolled out to improve customer experience and drive comparable sales growth, with plans to complete approximately 150 stores by the end of 2026 [12][18] Management's Comments on Operating Environment and Future Outlook - Management expressed dissatisfaction with current comparable performance but noted significant progress in strategic initiatives that should lead to stronger performance in 2026 [22][32] - The company is adjusting its guidance for the year, anticipating a range of 0.6%-0.9% for comparable store sales growth [29] Other Important Information - The company is investing in technology to enhance inventory visibility and improve operational efficiency for independent operators [8][9] - New leadership hires in operations and supply chain are expected to strengthen the company's execution capabilities [20][21] Q&A Session Summary Question: What was the split of transaction versus average ticket for Q3? - Management noted that transactions were running just under 2% while basket sizes were down slightly, leading to a 1.2% comp growth [33] Question: Can you provide more detail on the promotional activity and marketing mix? - Management indicated that adjustments in promotions and marketing led to a correlation with comp performance, with a return to positive comps after course corrections [34][36] Question: What is the expected comp growth needed to leverage SG&A? - The company indicated that around 2.5% comp growth is needed to achieve SG&A leverage [56] Question: How is the refresh program performing in different markets? - Management reported positive results from the refresh program across various markets, with significant improvements in basket size and customer experience [57] Question: What impact do you expect from SNAP benefits changes? - Management stated that while SNAP accounts for about 9% of sales, historical data showed no significant impact on sales during previous reductions in benefits [44]

Grocery Outlet Business Overview November 2025 Data in this presentation is generally as the fiscal year ended December 28, 2024, unless otherwise noted Disclaimer Forward-Looking Statements This presentation includes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All statements contained in this presentation other than statements of historical fact, including statements regarding the Company's future operating results and financial position, the Compa ...

Financial Performance - Net sales increased by 5.4% to $1.17 billion in Q3 FY2025, driven by new store sales and a 1.2% increase in comparable store sales[5]. - Net income for Q3 FY2025 was $11.6 million, or $0.12 per diluted share, down from $24.2 million, or $0.24 per diluted share in the prior year[10]. - Adjusted EBITDA was $66.7 million, or 5.7% of net sales, compared to $72.3 million, or 6.5% of net sales in the prior year[10]. - Net income for the 13 weeks ended September 27, 2025, was $11,605,000, compared to a net income of $24,178,000 for the same period in 2024, representing a decrease of 52%[36]. - Adjusted EBITDA for the 39 weeks ended September 27, 2025, was $186,300,000, an increase from $179,531,000 in the same period in 2024, reflecting a growth of 3.4%[36]. - Adjusted net income for the 39 weeks ended September 27, 2025, was $56,460,000, down from $61,757,000 in the same period in 2024, a decline of 8.5%[38]. - Basic GAAP earnings per share for the 13 weeks ended September 27, 2025, was $0.12, compared to $0.25 for the same period in 2024, a decrease of 52%[38]. Sales and Store Operations - Comparable store sales growth was supported by a 1.8% increase in the number of transactions, partially offset by a 0.6% decrease in average transaction size[7]. - The company opened 13 new stores and closed 2, ending the quarter with 563 stores across 16 states[7]. - For FY2025, the company revised net sales guidance to $4.70 billion to $4.72 billion, down from the previous range of $4.7 billion to $4.8 billion[16]. - Net sales for the 13 weeks ended September 27, 2025, were $1,168,153, an increase of 5.4% compared to $1,108,183 for the same period in 2024[30]. Expenses and Margins - Gross margin decreased to 30.4% from 31.1% in the previous year, primarily due to promotional activities and markdowns[5][8]. - SG&A expenses rose by 8.7% to $331.0 million, representing 28.3% of net sales, influenced by costs related to new store growth[9][10]. - Operating income decreased to $13,088 for the 39 weeks ended September 27, 2025, from $66,954 in 2024, indicating challenges in operational efficiency[30]. - The company reported interest expense of $19,769,000 for the 39 weeks ended September 27, 2025, compared to $15,174,000 for the same period in 2024, indicating an increase of 30%[36]. - Share-based compensation expense for the 39 weeks ended September 27, 2025, was $7,408,000, down from $16,806,000 in the same period in 2024, a reduction of 56%[38]. Cash Flow and Assets - Net cash provided by operating activities in Q3 FY2025 was $17.3 million, a decrease from $23.0 million in the same quarter last year[17]. - Total assets increased to $3,368,638 as of September 27, 2025, compared to $3,173,821 as of December 28, 2024, showing growth in the company's asset base[32]. - Cash and cash equivalents decreased to $52,125 at the end of the period from $62,828 at the beginning, indicating cash flow challenges[34]. - Merchandise inventories rose to $417,846 as of September 27, 2025, compared to $394,152 as of December 28, 2024, indicating inventory management challenges[32]. Restructuring and Strategic Adjustments - The restructuring plan incurred total costs of $62 million, with $38 million as cash expenditures, aimed at improving long-term profitability[15]. - The company incurred restructuring charges of $46,328 for the 39 weeks ended September 27, 2025, reflecting ongoing strategic adjustments[30]. - The company reported acquisition and integration costs of $1,038,000 for the 39 weeks ended September 27, 2025, compared to $8,346,000 for the same period in 2024, a decrease of 87.6%[38]. Market Presence and Future Outlook - The company has more than 560 stores across various states, highlighting its extensive market presence[27]. - Future growth strategies may be impacted by risks associated with economic conditions and competition in the retail food industry[25]. - The company reported a net loss of $6,751 for the 39 weeks ended September 27, 2025, compared to a net income of $37,154 for the same period in 2024[34]. - The company reported asset impairment and gain or loss on disposition of $5,015,000 for the 39 weeks ended September 27, 2025, compared to $961,000 for the same period in 2024, an increase of 422%[38].

Core Insights - Grocery Outlet Holding Corp. reported financial results for the third quarter of fiscal 2025, showing a net sales increase of 5.4% year-over-year to $1.17 billion, driven by new store sales and a 1.2% rise in comparable store sales [6][10] - The company launched a store refresh program, which is expected to enhance same-store sales growth in 2026 despite not meeting expectations in the third quarter [5][6] - Adjusted net income decreased by 25.7% to $20.7 million, with diluted adjusted earnings per share at $0.21 compared to $0.28 in the previous year [9][39] Financial Summary for Third Quarter Fiscal 2025 - Net sales reached $1.17 billion, a 5.4% increase from the previous year, with comparable store sales up by 1.2% [6][10] - Gross margin was 30.4%, down from 31.1% year-over-year, while SG&A expenses rose by 8.7% to $331.0 million [6][8] - Operating income was $22.8 million, including $1.3 million in restructuring charges, and net income was $11.6 million, or $0.12 per diluted share, compared to $24.2 million, or $0.24 per diluted share last year [9][31] Financial Summary for 39 Weeks Ended September 27, 2025 - Net sales increased by 6.1% to $3.47 billion, with comparable store sales rising by 0.9% [10][11] - Gross profit was $1.06 billion, maintaining a gross margin of 30.5% [11] - The company reported a net loss of $6.8 million, or $(0.07) per diluted share, compared to net income of $37.2 million, or $0.37 per diluted share last year [13][39] Restructuring Plan - The company initiated a restructuring plan aimed at improving long-term profitability and cash flow, which included terminating leases for 28 unopened stores and reducing headcount [15][17] - Total costs incurred under the restructuring plan amounted to $62 million as of September 27, 2025 [15][17] Cash Flow & Capital Spending - Net cash provided by operating activities in the third quarter was $17.3 million, down from $23.0 million in the prior year [16] - Capital expenditures for the third quarter were $44.4 million, a decrease of $4.7 million compared to the same period last year [16] Outlook - The company revised its guidance for fiscal 2025, expecting net sales between $4.70 billion and $4.72 billion, with a comparable store sales increase projected at 0.6% to 0.9% [18] - Adjusted EBITDA guidance was updated to $258 million to $262 million, with diluted adjusted earnings per share expected to be between $0.78 and $0.80 [18]