Grocery Outlet Holding Corp. (GO) is expected to reveal its fourth-quarter 2023 earnings on February 27 after the market closes. Market analysts estimate that the company’s revenue will have increased by 5.5% to reach $982.4 million compared to the prior year. However, it is anticipated that the bottom line might have shrunk when compared to the previous year.
Factors at Play
Grocery Outlet’s efficient sourcing and distribution model, combined with outstanding service from independent operators, have been significant driving forces behind its revenue growth. The company’s strategic purchasing tactics, promotional endeavors, expansion of its store network, and the ongoing efforts to expand its e-commerce footprint are also seen as contributing to its positive trajectory.
The company’s introduction of same-day delivery services for essential items from almost all its stores has been well received, attracting frugal shoppers, increasing customer revisits, and boosting the average basket size. These factors are expected to have a positive impact on the upcoming earnings report.
However, the company expects its comparable-store sales and gross margin to be under pressure due to operational hurdles stemming from system upgrades. The transition had caused disruptions in ordering and inventory, which adversely affected sales and margins in the third quarter.
What the Zacks Model Predicts
The Zacks model does not conclusively predict an earnings beat for Grocery Outlet this time. Despite the positive combination of an Earnings ESP and a Zacks Rank, the current Zacks Rank for the company stands at #4 (Sell) with an Earnings ESP of -13.28% making the surprise prediction difficult.
Comparison with Other Stocks
Among other companies, Costco (COST), Ollie’s Bargain (OLLI), and Burlington Stores (BURL) are predicted to post favorable earnings beats based on current models. These companies are expected to show increased revenues and bottom-line growth. Costco, for instance, is forecasted to experience a rise in revenues and earnings per share.
Overall, Grocery Outlet’s upcoming earnings release will be closely watched by market participants to gauge the impact of its operational challenges and the effectiveness of its strategic initiatives.
One way to stay informed about the upcoming earnings releases is to keep an eye on the Zacks Earnings Calendar.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
