Canada markets open in 5 hours 50 minutes
  • S&P/TSX

    20,231.32
    +73.67 (+0.37%)
     
  • S&P 500

    4,246.59
    -8.56 (-0.20%)
     
  • DOW

    34,299.33
    -94.42 (-0.27%)
     
  • CAD/USD

    0.8213
    +0.0004 (+0.05%)
     
  • CRUDE OIL

    72.49
    +0.37 (+0.51%)
     
  • BTC-CAD

    49,021.71
    -245.64 (-0.50%)
     
  • CMC Crypto 200

    1,000.60
    -10.00 (-0.99%)
     
  • GOLD FUTURES

    1,861.50
    +5.10 (+0.27%)
     
  • RUSSELL 2000

    2,320.07
    -6.07 (-0.26%)
     
  • 10-Yr Bond

    1.4990
    0.0000 (0.00%)
     
  • NASDAQ futures

    14,045.00
    +14.75 (+0.11%)
     
  • VOLATILITY

    17.04
    +0.65 (+3.97%)
     
  • FTSE

    7,200.55
    +28.07 (+0.39%)
     
  • NIKKEI 225

    29,291.01
    -150.29 (-0.51%)
     
  • CAD/EUR

    0.6770
    +0.0005 (+0.07%)
     

Factors Likely to Shape Grocery Outlet's (GO) Q1 Earnings

  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.
·4 min read
  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.

Grocery Outlet Holding Corp. GO is scheduled to release first-quarter 2021 results on May 11. Although the Zacks Consensus Estimate for its first-quarter earnings has been stable at 22 cents over the past 30 days, the same suggests a decline of 39% from the year-ago quarter’s tally. Moreover, the consensus estimate for quarterly revenues is pegged at $760 million, which indicates a 0.1% decline from the year-ago period.

In the last reported quarter, the company delivered an earnings surprise of 4.4%. The Emeryville, CA-based company has a trailing four-quarter earnings surprise of nearly 54.2%, on average.

Key Factors to Note

Grocery Outlet’s flexible sourcing and distribution business model that helps it offer quality, name-brand consumables and fresh products at an exceptional value is commendable. Further, management’s efforts to refresh its brand image by updating the website, modernizing the logo and adopting the new marketing campaign bode well. Also, its compelling value proposition is expected to have encouraged customers to revisit stores and increase basket sizes. These are likely to have aided the company’s first quarter results.

Moreover, expanded product offerings, better deals and increased focus on Natural, Organic, Specialty and Healthy or “NOSH” products might have provided some cushion to the top line. Markedly, Grocery Outlet’s digital marketing efforts should have favored first-quarter results. Apart from these, aggressive store openings along with strategic investments including enhanced point of sale, warehouse management, vendor tracking, store communications, real estate lease management, and financial planning and analysis might have contributed to the performance in the quarter under review.

Despite January comp sales rising in the mid-single digits and February comp sales improving in low-single digits, management in its last earnings call noted that its first-quarter 2021 comparable sales are likely to decline in high-single digits. This can be attributable to the impact of cycling the initial demand surge witnessed in March 2020, due to the COVID-19 pandemic. Further, incremental expenses related to the pandemic such as additional employee payments and benefits, along with investments undertaken to preserve the safety and health of customers and team members might have weighed on the company’s profitability.

Grocery Outlet Holding Corp. Price and EPS Surprise

Grocery Outlet Holding Corp. Price and EPS Surprise
Grocery Outlet Holding Corp. Price and EPS Surprise

Grocery Outlet Holding Corp. price-eps-surprise | Grocery Outlet Holding Corp. Quote

What the Zacks Model Unveils

Our proven model does not conclusively predict an earnings beat for Grocery Outlet this time around. 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. But that’s not the case here. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Grocery Outlet carries a Zacks Rank #2 but an Earnings ESP of 0.00%.

Stocks Poised to Beat Earnings Estimates

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

Sanderson Farms, Inc. SAFM has an Earnings ESP of +3.13% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Flower Foods, Inc. FLO has an Earnings ESP of +5.41% and a Zacks Rank #3, at present.

The J. M. Smucker Company SJM currently has an Earnings ESP of +1.49% and a Zacks Rank #3.

+1,500% Growth: One of 2021’s Most Exciting Investment Opportunities

In addition to the stocks you read about above, would you like to see Zacks’ top picks to capitalize on the Internet of Things (IoT)? It is one of the fastest-growing technologies in history, with an estimated 77 billion devices to be connected by 2025. That works out to 127 new devices per second.

Zacks has released a special report to help you capitalize on the Internet of Things’s exponential growth. It reveals 4 under-the-radar stocks that could be some of the most profitable holdings in your portfolio in 2021 and beyond.

Click here to download this report FREE >>


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

The J. M. Smucker Company (SJM) : Free Stock Analysis Report

Sanderson Farms, Inc. (SAFM) : Free Stock Analysis Report

Flowers Foods, Inc. (FLO) : Free Stock Analysis Report

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

To read this article on Zacks.com click here.