Yahoo Finance Grocery Outlet (GO) Rides High on Strategies: Apt to Hold
Grocery Outlet Holding Corp. GO seems well-poised for growth, thanks to its unique business model, strength in product offerings and store-growth endeavors. Management is focused on efficient marketing strategies to bolster sales and profitability. GO’s opportunistic purchasing strategy and e-commerce initiatives to deepen customer reach appear encouraging as well. Impressively, the grocery retailer’s shares increased 5.9% in the year-to-date period against the industry’s 9% dip.
Additionally, analysts look optimistic about the company. For 2022, the Zacks Consensus Estimate for Grocery Outlet’s sales and earnings per share (EPS) is currently pegged at $3.55 billion and $1.01, respectively. These estimates suggest respective growth of 15.3% and 12.2% from the year-ago fiscal period’s corresponding figures.
Let’s Delve Deeper
Grocery Outlet’s flexible sourcing and distribution business model differentiates it from traditional retailers and places it well for sustainable growth. This helps it offer quality, branded consumables and fresh products at exceptional value. GO’s product offering is ever-changing with a constant rotation of opportunistic products, complemented by everyday staple products. In addition, GO’s “WOW!” deals coupled with an updated website and marketing campaigns appear impressive. These factors help drive consumers and in turn, boost traffic and sales.
Grocery Outlet’s underlying business strength across areas, such as opportunistic supply, product assortments, and engagement with customers and independent operators looks solid. GO is offering same-day delivery of everyday essentials and staples from all its stores in collaboration with Instacart and DoorDash.
The company also teamed up with Uber Technologies to pilot on-demand and scheduled grocery delivery. Additionally, GO is piloting a mobile app in Washington State, whereby customers can view the trending items in stores on a real-time basis and access curated product recommendations based on their preferences.
Coming to its store-growth opportunities, Grocery Outlet has been making strategic investments for a while to improve its functionality and scalability. These include enhanced point of sale, warehouse management, vendor tracking, store communications, real-estate lease management, and financial planning and analysis. Management believes that there is room to establish 4,800 locations nationally, in the long term.
What’s More?
Stellar third-quarter 2022 results and strong quarter-to-date trends prompted management to lift the net sales and earnings view for 2022. Management projected 2022 net sales of $3.55 billion (compared with $3.08 billion in 2021) and comparable store sales growth of 11% (against a decline of 6% in 2021). It projected adjusted EBITDA at $224 million in 2022. The company now envisions adjusted earnings of $1.00 per share for 2022, suggesting an increase from the 90 cents reported in 2021. Management guided fourth-quarter comparable store sales growth of 12% against a 1.2% dip witnessed in the prior-year fiscal quarter.
On a concluding note, Grocery Outlet will continue performing well ahead on the aforesaid strengths. A Growth Score of B and a long-term expected earnings growth rate of 11.9% further speak volumes for this presently Zacks Rank #3 (Hold) stock.
Don’t Miss These Solid Bets
Some better-ranked stocks are Lamb Weston LW, TreeHouse Foods THS and General Mills GIS.
Lamb Weston,a leading global manufacturer, marketer and distributor of value-added frozen potato products, currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Lamb Weston’s current financial-year sales suggests growth of 14.8% and 42.3%, respectively, from the year-ago fiscal period’s reported figures. LW has a trailing four-quarter earnings surprise of 47.3%, on average.
TreeHouse Foods, a manufacturer of packaged foods and beverages, currently sports a Zacks Rank of 1. THS has a trailing four-quarter earnings surprise of 355.9%, on average.
The Zacks Consensus Estimate for TreeHouse Foods’ current financial-year sales and EPS suggests growth of 16.8% and 15.1%, respectively, from the corresponding year-ago reported figures.
General Mills, which manufactures and markets branded consumer foods worldwide, currently carries a Zacks Rank #2 (Buy). GIS has a trailing four-quarter earnings surprise of 6.1%, on average.
The Zacks Consensus Estimate for General Mills’ current financial-year sales and EPS suggests growth of 2.6% and 3.6%, respectively, from the corresponding year-ago reported figures.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
General Mills, Inc. (GIS) : Free Stock Analysis Report
TreeHouse Foods, Inc. (THS) : Free Stock Analysis Report
Grocery Outlet Holding Corp. (GO) : Free Stock Analysis Report
Lamb Weston (LW) : Free Stock Analysis Report
