Discount grocery store chain Grocery Outlet (NASDAQ:GO) will be announcing earnings results tomorrow after market hours. Here’s what to expect.
Grocery Outlet beat analysts’ revenue expectations by 1.1% last quarter, reporting revenues of $1.11 billion, up 10.4% year on year. It was a mixed quarter for the company, with a decent beat of analysts’ EBITDA estimates but full-year EBITDA guidance missing analysts’ expectations.
Is Grocery Outlet a buy or sell going into earnings? Read our full analysis here, it’s free.
This quarter, analysts are expecting Grocery Outlet’s revenue to grow 9.9% year on year to $1.09 billion, improving from the 6.3% increase it recorded in the same quarter last year. Adjusted earnings are expected to come in at $0.17 per share.
Analysts covering the company have generally reconfirmed their estimates over the last 30 days, suggesting they anticipate the business to stay the course heading into earnings. Grocery Outlet has missed Wall Street’s revenue estimates four times over the last two years.
Looking at Grocery Outlet’s peers in the non-discretionary retail segment, some have already reported their Q4 results, giving us a hint as to what we can expect. Sprouts delivered year-on-year revenue growth of 17.5%, beating analysts’ expectations by 1.7%, and Walmart reported revenues up 4.1%, in line with consensus estimates. Sprouts traded down 15.6% following the results while Walmart was also down 8.8%.
Read our full analysis of Sprouts’s results here and Walmart’s results here.
Valuation multiples for many growth stocks have not yet reverted to their early 2021 highs, but the market has been optimistic as of late due to a soft landing. This is an economic situation where rate hikes successfully quelled inflation but did not send the economy into a recession. Furthermore, recent rate cuts and Donald Trump's triumph in the 2024 Presidential election have been tailwinds for the market, and while some of the non-discretionary retail stocks have shown solid performance, the group has generally underperformed, with share prices down 7.7% on average over the last month. Grocery Outlet is down 6.8% during the same time and is heading into earnings with an average analyst price target of $17 (compared to the current share price of $15.75).
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