tiprankstipranks
Trending News
More News >
Grocery Outlet Holding Corp (GO)
NASDAQ:GO
US Market

Grocery Outlet Holding (GO) AI Stock Analysis

Compare
496 Followers

Top Page

GO

Grocery Outlet Holding

(NASDAQ:GO)

Rating:58Neutral
Price Target:
$14.00
▲(8.53%Upside)
Grocery Outlet Holding's score is primarily influenced by its steady revenue growth and cost management. However, profitability and valuation concerns weigh heavily, as does the mixed technical outlook. The earnings call provides some positive guidance and strategic initiatives, but challenges like reduced sales outlook and net loss remain significant.
Positive Factors
Insider Confidence
A handful of sizable insider transactions during the quarter adds confidence around eventual recovery.
Leadership
The company is on the right track with a new CEO and CFO focusing on strategic priorities to restore long-term growth.
Stock Price Target
Price target has been raised from $15.00 to $18.00, indicating improved expectations for the stock.
Negative Factors
Comparable Sales
A reduction in the full-year comp guide (1-2% from 2-3% prior) was disappointing and raises questions about the top-line outlook.
Technology Transition
Transition to new tech systems has led to significant issues, affecting data visibility and financial system speeds.
Valuation
The recent move in the stock keeps a lid on near-term upside with GO now trading at a high valuation compared to consensus estimates.

Grocery Outlet Holding (GO) vs. SPDR S&P 500 ETF (SPY)

Grocery Outlet Holding Business Overview & Revenue Model

Company DescriptionGrocery Outlet Holding Corp. owns and operates a network of independently operated stores in the United States. The company's stores offer products in various categories, such as dairy and deli, produce, floral, and fresh meat and seafood products, as well as grocery, general merchandise, health and beauty care, frozen foods, and beer and wine. As of August 09, 2022, it had 425 stores in eight states. The company was founded in 1946 and is headquartered in Emeryville, California.
How the Company Makes MoneyGrocery Outlet makes money primarily through the sale of discounted grocery products and household goods. The company's revenue model hinges on purchasing excess inventory from both branded manufacturers and other retailers, which it acquires at significant discounts. This inventory is then sold through its network of independently operated stores, providing savings to customers while maintaining healthy margins. Key revenue streams include direct product sales, franchise fees from independent operators, and bulk purchasing agreements. A significant factor contributing to its earnings is the strong relationships it maintains with suppliers, allowing it to secure inventory at favorable prices, which is essential to sustaining its discount pricing strategy.

Grocery Outlet Holding Earnings Call Summary

Earnings Call Date:May 06, 2025
(Q1-2025)
|
% Change Since: -21.00%|
Next Earnings Date:Aug 12, 2025
Earnings Call Sentiment Neutral
The earnings call presented a mixed performance with notable achievements in sales growth, margin improvements, and system integration. However, challenges such as a reduced comp sales outlook, net loss, and restructuring charges indicate areas of concern. Execution and strategic initiatives are underway to address these issues.
Q1-2025 Updates
Positive Updates
Net Sales Increase
Net sales increased by 8.5% to $1.13 billion driven by new store openings and a 30 basis point increase in comparable store sales.
Gross Margin Improvement
Gross margin increased by 110 basis points to 30.4%, exceeding expectations due to improvements in inventory management.
Adjusted EBITDA Growth
Adjusted EBITDA increased by 31.7% to $51.9 million, with a margin of 4.6%, up 80 basis points from the prior year.
New Store Openings
11 new stores were opened in the first quarter, putting the company on track to achieve its annual target of 33 to 35 net new stores.
System Integration Progress
Completed the initial Phase 1 rollout of the real-time ordering guide, improving inventory visibility and execution.
Traffic Increase
Comp growth driven by a 2.3% increase in the number of transactions, showcasing strong traffic.
Negative Updates
Comparable Store Sales Decline
Comparable store sales growth outlook for the full year reduced to between 1% and 2% due to pressure on the basket and macroeconomic trends.
Net Loss
Reported a net loss of $23.3 million compared to a net loss of $1 million last year.
Decrease in Average Transaction Size
Average transaction size decreased by 2%, impacting overall comp sales.
Restructuring Charges
Incurred $33.9 million in restructuring charges related to lease terminations, asset impairment, and employee severance.
Soft April Sales
April was softer than expected, possibly due to macroeconomic uncertainties and an Easter holiday shift.
Company Guidance
During the Grocery Outlet's first quarter 2025 earnings call, management provided guidance that included several key metrics and strategic priorities. They reported a 30-basis-point increase in comparable store sales, slightly ahead of their guidance, and opened 10 net new stores, aiming to reach an annual target of 33 to 35 new stores. The company achieved net sales of $1.13 billion, an 8.5% increase over the previous year, with adjusted EBITDA and adjusted EPS surpassing outlook ranges. Gross margin exceeded expectations due to improved inventory management, contributing to a 110-basis-point increase to 30.4%. Looking ahead, the company moderated its annual comparable store sales growth outlook to 1% to 2%, considering current business trends and macroeconomic uncertainty, while maintaining confidence in its gross margin, adjusted EBITDA, and adjusted EPS projections. Strategic initiatives include enhancing new store performance, securing top talent, addressing execution gaps, and improving execution at scale to drive long-term growth and profitability.

Grocery Outlet Holding Financial Statement Overview

Summary
Grocery Outlet Holding shows steady revenue growth with effective cost management, evidenced by a strong gross profit margin. However, profitability metrics like the net profit margin and ROE are weak, suggesting challenges in boosting shareholder returns. The company's moderate reliance on debt financing could pose risks if not managed carefully. Strong operational cash flow is offset by negative free cash flow, indicating investment needs or cash constraints.
Income Statement
69
Positive
Grocery Outlet Holding shows steady revenue growth, with a TTM revenue increase of 1.91% over the previous year. Gross profit margin is healthy at 30.50%, indicating effective cost management. However, net profit margin is relatively low at 0.38%, suggesting pressure on bottom-line profitability. The EBIT margin stands at 1.24%, reflecting moderate operational efficiency, while the EBITDA margin of 3.20% indicates some room for improvement in operational leverage.
Balance Sheet
63
Positive
The company's balance sheet reveals a moderate debt-to-equity ratio of 1.48, indicating reliance on debt financing. Return on equity (ROE) is low at 1.46%, suggesting limited returns for shareholders relative to equity. The equity ratio of 36.05% reflects a balanced capital structure but highlights potential risk if liabilities grow further.
Cash Flow
58
Neutral
Cash flow analysis shows a decline in free cash flow, with a TTM free cash flow of -$66.42 million compared to the previous period. The operating cash flow to net income ratio is robust at 9.49, indicating strong cash generation relative to net income. However, the negative free cash flow to net income ratio of -3.87 highlights cash flow strains.
BreakdownTTMDec 2024Dec 2023Dec 2022Mar 2022Mar 2021
Income Statement
Total Revenue4.46B4.37B3.97B3.58B3.08B3.13B
Gross Profit1.36B1.32B1.24B1.09B948.79M973.35M
EBITDA142.81M193.23M214.97M173.24M160.22M165.43M
Net Income17.17M39.47M79.44M65.05M62.31M106.71M
Balance Sheet
Total Assets3.27B3.17B2.97B2.77B2.67B2.49B
Cash, Cash Equivalents and Short-Term Investments50.91M62.83M114.99M102.73M140.09M105.33M
Total Debt1.74B1.66B1.39B1.41B1.46B1.38B
Total Liabilities2.09B1.98B1.75B1.66B1.66B1.56B
Stockholders Equity1.18B1.20B1.22B1.11B1.01B922.31M
Cash Flow
Free Cash Flow-66.42M-74.65M111.46M38.44M32.43M50.46M
Operating Cash Flow163.06M111.96M303.45M185.51M165.59M181.24M
Investing Cash Flow-291.82M-274.03M-194.16M-149.93M-136.71M-133.79M
Financing Cash Flow112.79M109.91M-97.02M-72.94M5.88M29.77M

Grocery Outlet Holding Technical Analysis

Technical Analysis Sentiment
Negative
Last Price12.90
Price Trends
50DMA
14.02
Negative
100DMA
13.91
Negative
200DMA
15.49
Negative
Market Momentum
MACD
-0.23
Negative
RSI
44.10
Neutral
STOCH
54.79
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For GO, the sentiment is Negative. The current price of 12.9 is below the 20-day moving average (MA) of 13.17, below the 50-day MA of 14.02, and below the 200-day MA of 15.49, indicating a bearish trend. The MACD of -0.23 indicates Negative momentum. The RSI at 44.10 is Neutral, neither overbought nor oversold. The STOCH value of 54.79 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for GO.

Grocery Outlet Holding Risk Analysis

Grocery Outlet Holding disclosed 45 risk factors in its most recent earnings report. Grocery Outlet Holding reported the most risks in the "Finance & Corporate" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks

Grocery Outlet Holding Peers Comparison

Overall Rating
UnderperformOutperform
Sector (65)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
77
Outperform
$514.28M9.9611.87%2.59%3.94%12.50%
ACACI
71
Outperform
$12.83B13.8531.26%2.64%1.46%-26.54%
67
Neutral
$904.25M22.1523.38%1.22%9.36%43.17%
65
Neutral
£10.18B12.883.35%288.56%-1.42%18.13%
65
Neutral
$1.24B20.434.00%0.99%-7.79%-64.85%
WMWMK
65
Neutral
$2.04B18.987.54%1.79%1.76%6.01%
GOGO
58
Neutral
$1.30B76.601.43%10.37%-73.84%
* Consumer Defensive Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
GO
Grocery Outlet Holding
12.90
-8.71
-40.31%
IMKTA
Ingles Markets
66.06
-2.26
-3.31%
VLGEA
Village Super Market
37.10
12.41
50.26%
WMK
Weis Markets
74.04
13.06
21.42%
NGVC
Natural Grocers
38.02
15.94
72.19%
ACI
Albertsons Companies
22.16
3.22
17.00%

Grocery Outlet Holding Corporate Events

Executive/Board ChangesBusiness Operations and Strategy
Grocery Outlet Holding Appoints New Independent Directors
Positive
Jun 26, 2025

On June 25, 2025, Grocery Outlet Holding Corp. announced the appointment of Michael Kobayashi and Lawrence ‘Chip’ Molloy as new independent directors to its Board, effective June 26, 2025. This move is part of the company’s board refreshment and leadership transition efforts to drive growth and profitability. The appointments follow a national search and will see both directors serve on the Audit and Risk Committee. Concurrently, long-serving directors Kenneth Alterman and Thomas Herman will retire on August 7, 2025, leading to a reduction of the board size back to ten directors. Kobayashi brings extensive experience in retail technology and operations, while Molloy offers significant financial leadership expertise, both expected to support the company’s strategic growth initiatives.

The most recent analyst rating on (GO) stock is a Hold with a $16.00 price target. To see the full list of analyst forecasts on Grocery Outlet Holding stock, see the GO Stock Forecast page.

Shareholder Meetings
Grocery Outlet Holding Approves Key Governance Amendments
Neutral
Jun 6, 2025

On June 2, 2025, Grocery Outlet Holding‘s stockholders approved amendments to the company’s Restated Certificate of Incorporation during the annual meeting. These amendments allow stockholders holding at least 25% of the company’s shares to call special meetings and permit officer exculpation in line with Delaware law changes. The amendments, effective June 4, 2025, aim to enhance stockholder rights and align with legal standards, potentially impacting the company’s governance and shareholder engagement.

The most recent analyst rating on (GO) stock is a Hold with a $16.00 price target. To see the full list of analyst forecasts on Grocery Outlet Holding stock, see the GO Stock Forecast page.

Executive/Board Changes
Grocery Outlet Holding VP Resignation Announced
Neutral
May 16, 2025

On May 12, 2025, Lindsay E. Gray, Senior Vice President of Accounting at Grocery Outlet Holding Corp., announced her resignation effective June 2, 2025, to pursue another opportunity. Her departure was not due to any disagreements with the company’s operations, policies, or practices, indicating a smooth transition for the company.

The most recent analyst rating on (GO) stock is a Hold with a $16.00 price target. To see the full list of analyst forecasts on Grocery Outlet Holding stock, see the GO Stock Forecast page.

Executive/Board ChangesBusiness Operations and StrategyFinancial Disclosures
Grocery Outlet Announces Executive Departures Amid Restructuring
Neutral
May 6, 2025

On May 5, 2025, Grocery Outlet announced the upcoming departures of two key executives, Ramesh Chikkala and Pamela B. Burke, who will receive separation benefits under the company’s Executive Severance Plan. The company reported its first-quarter fiscal 2025 financial results, highlighting an 8.5% increase in net sales to $1.13 billion and a 31.7% rise in adjusted EBITDA to $51.9 million. Despite an operating loss of $22.5 million due to restructuring charges, the company remains optimistic about its long-term potential, focusing on improving execution and becoming a beloved brand. The restructuring plan aims to optimize store growth and reduce costs, with actions expected to be completed by mid-2025.

Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.Date of analysis: Jul 05, 2025