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Grocery Outlet Holding Corp. Just Reported A Surprise Loss: Here's What Analysts Think Will Happen Next

It's been a mediocre week for Grocery Outlet Holding Corp. (NASDAQ:GO) shareholders, with the stock dropping 19% to US$20.92 in the week since its latest first-quarter results. Revenues came in at US$1.0b, in line with estimates, while Grocery Outlet Holding reported a statutory loss of US$0.01 per share, well short of prior analyst forecasts for a profit. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.

View our latest analysis for Grocery Outlet Holding


Taking into account the latest results, the consensus forecast from Grocery Outlet Holding's twelve analysts is for revenues of US$4.35b in 2024. This reflects a reasonable 7.7% improvement in revenue compared to the last 12 months. Statutory earnings per share are expected to reduce 6.9% to US$0.60 in the same period. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$4.34b and earnings per share (EPS) of US$0.86 in 2024. The analysts seem to have become more bearish following the latest results. While there were no changes to revenue forecasts, there was a pretty serious reduction to EPS estimates.


It might be a surprise to learn that the consensus price target fell 6.6% to US$29.09, with the analysts clearly linking lower forecast earnings to the performance of the stock price. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. The most optimistic Grocery Outlet Holding analyst has a price target of US$43.00 per share, while the most pessimistic values it at US$21.00. This is a fairly broad spread of estimates, suggesting that analysts are forecasting a wide range of possible outcomes for the business.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Grocery Outlet Holding's past performance and to peers in the same industry. We can infer from the latest estimates that forecasts expect a continuation of Grocery Outlet Holding'shistorical trends, as the 10% annualised revenue growth to the end of 2024 is roughly in line with the 10% annual growth over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenues grow 4.5% per year. So although Grocery Outlet Holding is expected to maintain its revenue growth rate, it's definitely expected to grow faster than the wider industry.

The Bottom Line

The most important thing to take away is that the analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. Happily, there were no major changes to revenue forecasts, with the business still expected to grow faster than the wider industry. The consensus price target fell measurably, with the analysts seemingly not reassured by the latest results, leading to a lower estimate of Grocery Outlet Holding's future valuation.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have estimates - from multiple Grocery Outlet Holding analysts - going out to 2026, and you can see them free on our platform here.

Even so, be aware that Grocery Outlet Holding is showing 1 warning sign in our investment analysis , you should know about...

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.