Grocery Outlet Holding (GO) AI Stock Analysis

• Market Cap: $1.79B
• Dividend Yield: N/A
• Average Volume (3M): 3.50M
• Price to Earnings (P/E): 232.4
• Beta (1Y): 0.59
• Revenue Growth: 8.47%
• EPS Growth: -85.17%
• Country: US
• Employees: 1,692
• Sector: Consumer Defensive
• Sector Strength: 61
• Industry: Grocery Stores
• EPS (TTM): 0.23
• Shares Outstanding: 98,103,294
• 10 Day Avg. Volume: 3,434,297
• 30 Day Avg. Volume: 3,499,823
• PEG Ratio: N/A
• Price to Book (P/B): N/A
• Price to Sales (P/S): N/A
• P/FCF Ratio: N/A
• Enterprise Value/Market Cap: 1.65
• Enterprise Value/Revenue: 0.65
• Enterprise Value/Gross Profit: 2.15
• Enterprise Value/Ebitda: 17.89
• 1Y Price Target: $16.95
• Price Target Upside: -6.15% Downside
• Rating Consensus: Hold
• Number of Analyst Covering: 12

• Rating: 68 Neutral
• Price Target: $19.50 ▲(7.97% Upside)

The overall stock score is driven by strong earnings call performance and positive technical analysis, despite financial performance challenges and high valuation concerns. The company's strategic initiatives and store expansion plans provide a positive outlook, but profitability and cash flow issues need addressing.

Positive Factors

Gross Margin

GO's gross margin improvement of ~110 bps y/y in Q1'25 is the first in over a year and a sign that systems issues are being resolved.

Leadership

The new CEO, Jason Potter, impresses with a disciplined focus on merchandise, inventory fundamentals, and execution gaps in tech systems, private label, and supply chain.

Price Target

Price target has been raised from $15.00 to $18.00, indicating improved expectations for the stock.

Negative Factors

Comparable Sales

There is near-term pressure on comparable sales growth, which could impact the stock.

Margin Compression

GO expects year-over-year margin compression in 2Q due to tougher margin comparisons.

Tech Systems

Transition to new tech systems has led to significant issues, affecting data visibility and financial system speeds.

Grocery Outlet Holding Business Overview & Revenue Model

Company Description

Grocery 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 Money

Grocery Outlet makes money primarily through the sale of grocery products at discounted prices. The company's revenue model is based on purchasing excess inventory from manufacturers and distributors at lower costs, which allows them to sell these goods at competitive prices while maintaining healthy profit margins. Key revenue streams include sales from grocery items, private label products, and seasonal promotions. Additionally, Grocery Outlet benefits from a unique business model that involves partnerships with independent operators, who manage individual store locations and contribute to the overall sales performance. These partnerships enable the company to expand its footprint while leveraging local market knowledge, further driving revenue growth.

Grocery Outlet Holding Financial Statement Overview

Summary

Grocery Outlet Holding shows stable revenue growth and gross profit margins, but faces challenges with profitability and cash flow management. High leverage and declining return on equity highlight potential financial risks.

Income Statement

Grocery Outlet Holding shows a modest revenue growth rate of 1.15% in the TTM, with a stable gross profit margin of 30.5%. However, the net profit margin is quite low at 0.38%, indicating challenges in converting revenue into profit. The EBIT and EBITDA margins have declined compared to previous years, suggesting increased operational costs or inefficiencies.

Balance Sheet

The company has a high debt-to-equity ratio of 1.48, indicating significant leverage, which could pose risks if not managed well. The return on equity has decreased to 1.42%, reflecting lower profitability on shareholders' investments. The equity ratio is stable, suggesting a balanced asset structure.

Cash Flow

Free cash flow has decreased significantly, with a negative growth rate of -30.19% in the TTM, and the free cash flow to net income ratio is negative, indicating cash flow challenges. The operating cash flow to net income ratio is 0.42, showing some ability to generate cash from operations, but it has declined from previous periods.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	4.51B	4.37B	3.97B	3.58B	3.08B	3.13B
Gross Profit	1.37B	1.32B	1.24B	1.09B	948.79M	973.35M
EBITDA	164.92M	193.23M	214.97M	173.24M	165.44M	166.96M
Net Income	8.13M	39.47M	79.44M	65.05M	62.31M	106.71M
Balance Sheet
Total Assets	3.32B	3.17B	2.97B	2.77B	2.67B	2.49B
Cash, Cash Equivalents and Short-Term Investments	55.19M	62.83M	114.99M	102.73M	140.09M	105.33M
Total Debt	1.76B	1.66B	1.39B	1.41B	1.46B	1.38B
Total Liabilities	2.14B	1.98B	1.75B	1.66B	1.66B	1.56B
Stockholders Equity	1.19B	1.20B	1.22B	1.11B	1.01B	922.31M
Cash Flow
Free Cash Flow	-51.20M	-74.65M	111.46M	38.44M	32.43M	50.46M
Operating Cash Flow	195.09M	111.96M	303.45M	185.51M	165.59M	181.24M
Investing Cash Flow	-254.90M	-274.03M	-194.16M	-149.93M	-136.71M	-133.79M
Financing Cash Flow	47.94M	109.91M	-97.02M	-72.94M	5.88M	29.77M

Grocery Outlet Holding Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 18.06
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Negative
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For GO, the sentiment is Positive. The current price of 18.06 is above the 20-day moving average (MA) of 16.35, above the 50-day MA of 14.53, and above the 200-day MA of 15.31, indicating a bullish trend. The MACD of 1.23 indicates Negative momentum. The RSI at 65.60 is Neutral, neither overbought nor oversold. The STOCH value of 41.13 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for GO.

Grocery Outlet Holding Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
VLGEA	72 Outperform	$480.07M	9.30	11.87%	2.76%	3.94%	12.50%
NGVC	70 Outperform	$934.23M	21.67	23.58%	1.13%	8.51%	40.83%
GO	68 Neutral	$1.79B	232.41	0.68%	―	8.47%	-85.17%
WMK	67 Neutral	$1.77B	17.78	7.86%	1.90%	2.49%	15.99%
Sector *	67 Neutral	S$3.20B	10.78	14.90%	4.58%	7.79%	-10.29%
ACI	61 Neutral	$10.88B	11.85	31.10%	2.89%	1.96%	-14.99%
IMKTA	52 Neutral	$1.22B	22.10	3.58%	1.01%	-7.96%	-64.67%

Grocery Outlet Holding Corporate Events

Grocery Outlet Holding Appoints New Independent Directors

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.

Grocery Outlet Holding Approves Key Governance Amendments

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.