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Here's How Grocery Outlet (GO) Looks Just Ahead of Q4 Earnings

Grocery Outlet Holding Corp. GO is likely to register an increase in the top line when it reports fourth-quarter 2023 earnings on Feb 27 after market close. The Zacks Consensus Estimate for revenues stands at $982.4 million, indicating an increase of 5.5% from the prior-year reported figure.

However, the bottom line is expected to have decreased year over year. Over the past 30 days, the Zacks Consensus Estimate for fourth-quarter earnings per share has been stable at 16 cents, suggesting a decline of 36% from the year-ago quarter.

Grocery Outlet, the extreme value retailer of quality, name-brand consumables and fresh products, has a trailing four-quarter earnings surprise of 16%, on average. In the last reported quarter, this Emeryville, CA-based company surpassed the Zacks Consensus Estimate by a margin of 14.8%.

Factors to Note

Grocery Outlet’s flexible sourcing and distribution business model, which helps it offer products at an exceptional value, and excellent service from independent operators are among the key factors driving revenues. The company’s opportunistic purchasing strategy, marketing efforts, store-growth endeavors and e-commerce initiatives to deepen the customer reach also appear encouraging.

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

Cumulatively, these are likely to have favorably impacted the to-be-reported quarter's top line. We expect comparable-store sales to increase 2% during the third quarter. However, this shows a sharp deceleration in the growth rate compared to the 6.4% increase recorded in the second quarter.

This is due to operational challenges stemming from the transition to upgraded systems. This transition led to ordering and inventory disruptions, which adversely impacted comparable store sales by approximately 150 basis points and the gross margin by 50 basis points in the third quarter of 2023.

With management anticipating a significant impact on financial results in the fourth quarter compared to the third quarter, the company guided further headwinds, expecting a 300-basis point drag on comparable store sales and 150-basis point pressure on the gross margin for the final quarter. Consequently, Grocery Outlet adjusted its 2023 guidance, revising the expected adjusted earnings range to $1.04-$1.06 per share from the previously projected $1.04-$1.08 per share range.

Grocery Outlet Holding Corp. Price, Consensus and EPS Surprise

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 doesn’t conclusively predict an earnings beat for Grocery Outlet this time. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. However, that’s not the case here.

Grocery Outlet currently has a Zacks Rank #4 (Sell) and an Earnings ESP of -13.28%, thus making the surprise prediction difficult. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

3 Stocks With the Favorable Combination

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

Costco COST currently has an Earnings ESP of +1.58% and carries a Zacks Rank #2. The Zacks Consensus Estimate for second-quarter fiscal 2024 earnings per share is pegged at $3.60, up 9.1% year over year. You can see the complete list of today’s Zacks #1 Rank stocks here.

Costco’s top line is expected to ascend year over year. The Zacks Consensus Estimate for quarterly revenues is pegged at $59.2 billion, which indicates an increase of 7.1% from the figure reported in the prior-year quarter. COST has a trailing four-quarter earnings surprise of 2.6%, on average.

Ollie's Bargain OLLI currently has an Earnings ESP of +1.12% and a Zacks Rank of 3. The company is likely to register an increase in the bottom line when it reports fourth-quarter fiscal 2023 numbers. The Zacks Consensus Estimate for quarterly earnings per share of $1.16 suggests a rise of 38.1% from the year-ago reported number.

Ollie's Bargain’s top line is expected to advance year over year. The Zacks Consensus Estimate for quarterly revenues is pegged at $649.1 million, which suggests an increase of 18.1% from the prior-year quarter. OLLI has a trailing four-quarter earnings surprise of 7%, on average.

Burlington Stores BURL currently has an Earnings ESP of +1.17% and a Zacks Rank #3. The company is expected to register a bottom-line increase when it reports fourth-quarter fiscal 2023 results. The Zacks Consensus Estimate for quarterly earnings per share of $3.25 suggests a rise of 9.8% from the year-ago quarter.

Burlington Stores’ top line is anticipated to advance year over year. The consensus mark for revenues is pegged at $3.02 billion, indicating an increase of 9.9% from the figure reported in the year-ago quarter. BURL has a trailing four-quarter earnings surprise of 9.4%, on average.

Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.

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Burlington Stores, Inc. (BURL) : Free Stock Analysis Report

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Grocery Outlet Holding Corp. (GO) : Free Stock Analysis Report

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