U.S. markets closed
  • S&P 500

    3,585.62
    -54.85 (-1.51%)
     
  • Dow 30

    28,725.51
    -500.10 (-1.71%)
     
  • Nasdaq

    10,575.62
    -161.89 (-1.51%)
     
  • Russell 2000

    1,664.72
    -10.21 (-0.61%)
     
  • Crude Oil

    79.74
    -1.49 (-1.83%)
     
  • Gold

    1,668.30
    -0.30 (-0.02%)
     
  • Silver

    19.01
    +0.30 (+1.62%)
     
  • EUR/USD

    0.9801
    -0.0018 (-0.19%)
     
  • 10-Yr Bond

    3.8040
    +0.0570 (+1.52%)
     
  • GBP/USD

    1.1166
    +0.0043 (+0.38%)
     
  • USD/JPY

    144.7200
    +0.2770 (+0.19%)
     
  • BTC-USD

    19,321.78
    -143.44 (-0.74%)
     
  • CMC Crypto 200

    443.49
    +0.06 (+0.01%)
     
  • FTSE 100

    6,893.81
    +12.22 (+0.18%)
     
  • Nikkei 225

    25,937.21
    -484.84 (-1.83%)
     

Here's Why You Should Hold Onto Grocery Outlet (GO) Stock

·4 min read

Grocery Outlet Holding Corp. GO looks poised with its unique business model, strength in product offerings and store-growth endeavors. Management is focused on efficient marketing strategies to bolster sales and overall profitability. GO’s opportunistic purchasing strategy and e-commerce initiatives to deepen its customer reach appear encouraging as well.

These tailwinds have aided the grocery retailer’s shares in surging 30.7% year to date against the industry’s 26.2% decline. A VGM Score of A for this presently Zacks Rank #3 (Hold) stock further speaks volumes.

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 $3.48 billion and 99 cents, respectively. These estimates suggest respective growth of 12.9% and 10% from the year-ago period’s corresponding figures.

Let’s Delve Deeper

Grocery Outlet’s flexible sourcing and distribution business model that differentiates it from traditional retailers poises the company well for sustainable growth. This helps it offer quality, branded consumables and fresh products at an exceptional value.

Zacks Investment Research
Zacks Investment Research


Image Source: Zacks Investment Research

The company’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 updated website and marketing campaigns, look impressive. These factors help drive consumers and boost traffic and sales.

Speaking of store-growth opportunities, Grocery Outlet has been undertaking strategic investments to improve 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.

In addition, Grocery Outlet is building on the underlying business strength across areas, such as opportunistic supply, product assortments, as well as engagement with customers and independent operators. Moreover, GO is offering the same-day delivery of everyday essentials and staples from all its stores in collaboration with Instacart and DoorDash.

It has also teamed up with Uber Technologies to pilot on-demand and scheduled grocery delivery. Additionally, Grocery Outlet is piloting a mobile app in Washington State. This will enable customers to view trending and top items in stores on a real-time basis and access curated product recommendations based on their preferences.

What’s More?

The aforementioned tailwinds aided Grocery Outlet to report better-than-expected second-quarter 2022 results, wherein the top and bottom lines beat the Zacks Consensus Estimate and improved year over year. Comparable store sales also increased 11.2% in the second quarter on a higher average ticket and positive traffic trends. As a result, management raised net sales and earnings views for 2022.

Grocery Outlet now expects 2022 net sales between $3.46 billion and $3.48 billion (versus $3.08 billion in 2021) as well as comparable store sales growth of 8% to 8.5% (against a decline of 6% in 2021). The company earlier projected net sales in the range of $3.39 billion-$3.42 billion and a comparable store sales increase in the band of 5.5%-6.5% for 2022. It projected adjusted EBITDA between $218 million and $223 million compared with $198.5 million in 2021.

Looking for Consumer Staple Stocks? Check These

Some better-ranked stocks are United Natural Foods UNFI, The Chef's Warehouse CHEF and General Mills GIS.

United Natural Foods distributes natural, organic, specialty, produce and conventional grocery and non-food products. UNFI 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 United Natural Foods’ current financial-year sales suggests 7.6% growth from the year-ago period’s reported figures. United Natural Foods has a trailing four-quarter earnings surprise of 29.9%, on average.

Chef’s Warehouse, a distributor of specialty food products in the United States, currently sports a Zacks Rank #1. CHEF has a trailing four-quarter earnings surprise of 355.9%, on average.

The Zacks Consensus Estimate for Chef Warehouse’s current financial-year sales suggests growth of 40.7% from the year-ago reported numbers.

General Mills, which manufactures and markets branded consumer foods worldwide, currently carries a Zacks Rank of 2 (Buy). GIS has a trailing four-quarter earnings surprise of 6.5%, on average.

The Zacks Consensus Estimate for General Mills’ current financial-year sales and EPS suggests growth of almost 2% and 1.5%, 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
 
United Natural Foods, Inc. (UNFI) : Free Stock Analysis Report
 
The Chefs' Warehouse, Inc. (CHEF) : Free Stock Analysis Report
 
Grocery Outlet Holding Corp. (GO) : Free Stock Analysis Report
 
To read this article on Zacks.com click here.
 
Zacks Investment Research