What to Expect From Grocery Outlet's (GO) Q2 Earnings?

Grocery Outlet Holding Corp. GO is likely to register an increase in the top line when it reports second-quarter 2022 earnings on Aug 9, after the market closes. The Zacks Consensus Estimate for revenues stands at $859.6 million, indicating an increase of 10.8% from the prior-year reported figure.

The bottom line of this extreme value retailer of quality, name-brand consumables and fresh product is expected to increase year over year. The Zacks Consensus Estimate for second-quarter earnings per share has been stable at 24 cents over the past 30 days. The figure suggests an increase of 4.4% from the year-ago period.

Grocery Outlet has a trailing four-quarter earnings surprise of 4.8%, on average. In the last reported quarter, this Emeryville, CA-based company surpassed the Zacks Consensus Estimate by a margin of 10%.

Factors to Note

Grocery Outlet’s flexible sourcing and distribution business model, which helps it in offering products at exceptional values as well as excellent service from independent operators, are among key factors driving revenues. The company’s opportunistic purchasing strategy, marketing efforts, store-growth endeavors and e-commerce initiatives to deepen customer reach also appear encouraging. Cumulatively, these are likely to have favorably impacted the to-be-reported quarter's top-line performance.

The company has been offering same-day delivery of everyday essentials and staples from nearly all its stores in collaboration with Instacart. We believe that Grocery Outlet’s compelling value proposition continues to attract bargain-hunters, encourage customers to revisit stores, and increase basket sizes.

On its last earnings call, management guided second-quarter 2022 net sales to be approximately $855 million compared with $775.5 million reported in the year-ago period. It projected comparable store sales growth of 6% against a decline of 10% witnessed in the prior-year quarter.

Despite these tailwinds, high labor costs, increased freight expenses, and supply chain issues remain concerns. These might have weighed on the company's margins. Management expected modest deleverage in SG&A expenses in the second quarter. Management had guided second-quarter gross margin of approximately 30.6% and an adjusted EBITDA margin of about 6.3%. This shows marginal contraction from gross margin of 30.7% and an adjusted EBITDA margin of 6.6% in the year-ago period.

Grocery Outlet Holding Corp. Price, Consensus and EPS Surprise

Grocery Outlet Holding Corp. Price, Consensus and EPS Surprise

Grocery Outlet Holding Corp. price-consensus-eps-surprise-chart | Grocery Outlet Holding Corp. Quote

What the Zacks Model Unveils

Our proven model predicts an earnings beat for Grocery Outlet this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. You can uncover the best stocks to buy or sell before they're reported with our Earnings ESP Filter. You can see the complete list of today's Zacks #1 Rank stocks here.

Grocery Outlet has an Earnings ESP of +3.55% and a Zacks Rank #2.

3 More Stocks With Favorable Combination

Here are three other companies you may want to consider, as our model shows that these too have the right combination of elements to post an earnings beat:

Dollar General DG currently has an Earnings ESP of +0.50% and a Zacks Rank of 2. The company is likely to register an increase in the bottom line when it reports second-quarter fiscal 2022 results. The Zacks Consensus Estimate for quarterly earnings has risen by a penny over the past seven days to $2.91 per share. The consensus mark for DG’s earnings per share suggests 8.2% growth from the year-ago quarter’s reported number.

Dollar General’s top line is expected to rise year over year. The Zacks Consensus Estimate for quarterly revenues is pegged at $9.35 billion, which suggests a rise of 8.1% from the figure reported in the prior-year quarter. DG delivered an earnings beat of 2.8%, on average, in the trailing four quarters.

The Children's Place PLCE currently has an Earnings ESP of +1.03% and a Zacks Rank #3. The company is likely to register bottom-line decline when it reports second-quarter fiscal 2022 numbers. The Zacks Consensus Estimate for quarterly earnings per share of 97 cents suggests a decline of 43.3% from the year-ago quarter.

The Children's Place's top line is expected to decline year over year. The Zacks Consensus Estimate for quarterly revenues is pegged at $395.6 million, which indicates a decline of 4.4% from the figure reported in the prior-year quarter. PLCE has a trailing four-quarter earnings surprise of 58%, on average.

Ollie's Bargain OLLI currently has an Earnings ESP of +6.06% and a Zacks Rank #3. The company is expected to register a bottom-line decline when it reports second-quarter fiscal 2022 results. The Zacks Consensus Estimate for quarterly earnings per share of 33 cents suggests a decline from 52 cents reported in the year-ago quarter.

Ollie's Bargain’s top line is anticipated to rise year over year. The consensus mark for revenues is pegged at $457.5 million, indicating an increase of 10% from the figure reported in the year-ago quarter.

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Dollar General Corporation (DG) : Free Stock Analysis Report
 
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Grocery Outlet Holding Corp. (GO) : Free Stock Analysis Report
 
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