Grocery Outlet Holding (NasdaqGS:GO) - Share price, News & Analysis

Q: What is the Fair Price of GO when looking at its future cash flows? For this estimate we use a Discounted Cash Flow model.

GO ($43.36) is trading above our estimate of [[fair value]] ($40.91)

GO fundamental analysis
Snowflake Score
Valuation	0/6
Future Growth	4/6
Past Performance	2/6
Financial Health	4/6
Dividends	0/6

GO Stock Overview

Grocery Outlet Holding Corp. owns and operates a network of independently operated stores in the United States.

Rewards

Earnings are forecast to grow 21.42% per year

Risk Analysis

Profit margins (1.7%) are lower than last year (3.6%)

Significant insider selling over the past 3 months

Grocery Outlet Holding Competitors

Sprouts Farmers Market

NasdaqGS:SFM

US$2.8b

Casey's General Stores

NasdaqGS:CASY

US$7.2b

Weis Markets

NYSE:WMK

US$2.0b

Ingles Markets

NasdaqGS:IMKT.A

US$1.7b

Price History & Performance

Summary of all time highs, changes and price drops for Grocery Outlet Holding
Historical stock prices
Current Share Price	US$43.36
52 Week High	US$43.55
52 Week Low	US$21.01
Beta	-0.20
1 Month Change	12.62%
3 Month Change	30.76%
1 Year Change	24.60%
3 Year Change	31.00%
5 Year Change	n/a
Change since IPO	52.09%

Recent News & Updates

Jun 07

Estimating The Fair Value Of Grocery Outlet Holding Corp. (NASDAQ:GO)

Today we'll do a simple run through of a valuation method used to estimate the attractiveness of Grocery Outlet Holding...

May 24

Grocery Outlet: Look For A Bargain

The current inflationary environment is favorable for Grocery Outlet’s value retail approach. Grocery Outlet’s supply model and flexibility allows for pricing advantages even in times of rising costs. Grocery Outlet’s growth strategy includes several lucrative potential areas of focus. I see Grocery Outlet as a hold, and I consider prices at or under $36.63 as potential buying points.

May 19

Capital Allocation Trends At Grocery Outlet Holding (NASDAQ:GO) Aren't Ideal

If we want to find a potential multi-bagger, often there are underlying trends that can provide clues. In a perfect...

Shareholder Returns

	GO	US Consumer Retailing	US Market
7D	8.0%	6.5%	6.3%
1Y	24.6%	1.0%	-18.8%

Return vs Industry: GO exceeded the US Consumer Retailing industry which returned 0.7% over the past year.

Return vs Market: GO exceeded the US Market which returned -18.4% over the past year.

Price Volatility

Is GO's price volatile compared to industry and market?
GO volatility
GO Average Weekly Movement	6.8%
Consumer Retailing Industry Average Movement	6.8%
Market Average Movement	8.1%
10% most volatile stocks in US Market	16.7%
10% least volatile stocks in US Market	3.2%

Stable Share Price: GO is not significantly more volatile than the rest of US stocks over the past 3 months, typically moving +/- 7% a week.

Volatility Over Time: GO's weekly volatility (7%) has been stable over the past year.

About the Company

Founded	Employees	CEO	Website
1946	875	Eric Lindberg	https://www.groceryoutlet.com

Grocery Outlet Holding Corp. owns and operates a network of independently operated stores in the United States. The company’s stores offer products in various categories, such as dairy and deli, produce, floral, and fresh meat and seafood products, as well as grocery, general merchandise, health and beauty care, frozen foods, and beer and wine. As of May 10, 2022, it had approximately 420 stores in California, Washington, Oregon, Pennsylvania, Idaho, Nevada, and New Jersey.

Grocery Outlet Holding Fundamentals Summary

How do Grocery Outlet Holding's earnings and revenue compare to its market cap?
GO fundamental statistics
Market Cap	US$4.18b
Earnings (TTM)	US$54.99m
Revenue (TTM)	US$3.16b

76.0x

P/E Ratio

1.3x

P/S Ratio

Is GO overvalued?

See Fair Value and valuation analysis

Earnings & Revenue

Key profitability statistics from the latest earnings report
GO income statement (TTM)
Revenue	US$3.16b
Cost of Revenue	US$2.19b
Gross Profit	US$967.75m
Other Expenses	US$912.76m
Earnings	US$54.99m

Last Reported Earnings

Apr 02, 2022

Next Earnings Date

n/a

Earnings per share (EPS)	0.57
Gross Margin	30.64%
Net Profit Margin	1.74%
Debt/Equity Ratio	44.1%

How did GO perform over the long term?

See historical performance and comparison

We’ve recently updated our valuation analysis.

Valuation

Is GO undervalued compared to its fair value, analyst forecasts and its price relative to the market?

Valuation Score

0/6

Valuation Score 0/6

Price-To-Earnings vs Peers
Price-To-Earnings vs Industry
Price-To-Earnings vs Fair Ratio
Below Fair Value
Significantly Below Fair Value
PEG Ratio

Key Valuation Metric

Which metric is best to use when looking at relative valuation for GO?

Other financial metrics that can be useful for relative valuation.

The above table shows the n/a ratio for GO. This is calculated by dividing GO's market cap by their current preferred multiple.
What is GO's n/a Ratio?
n/a Ratio	0x
n/a	n/a
Market Cap	US$4.18b

GO key valuation metrics and ratios. From Price to Earnings, Price to Sales and Price to Book to Price to Earnings Growth Ratio, Enterprise Value and EBITDA.
Key Statistics
Enterprise Value/Revenue	1.7x
Enterprise Value/EBITDA	34.8x
PEG Ratio	3.5x

Price to Earnings Ratio vs Peers

How does GO's PE Ratio compare to its peers?

GO PE Ratio vs Peers

The above table shows the PE ratio for GO vs its peers. Here we also display the market cap and forecasted growth for additional consideration.
Company	PE	Estimated Growth	Market Cap
Peer Average	14x
SFM Sprouts Farmers Market	11.4x	3.4%	US$2.8b
CASY Casey's General Stores	21.3x	6.7%	US$7.2b
WMK Weis Markets	17.5x	n/a	US$2.0b
IMKT.A Ingles Markets	6x	n/a	US$1.7b
GO Grocery Outlet Holding	76x	21.4%	US$4.2b

Forward PE

Price-To-Earnings vs Peers: GO is expensive based on its Price-To-Earnings Ratio (76x) compared to the peer average (14x).

Price to Earnings Ratio vs Industry

How does GO's PE Ratio compare vs other companies in the US Consumer Retailing Industry?

Price-To-Earnings vs Industry: GO is expensive based on its Price-To-Earnings Ratio (76x) compared to the US Consumer Retailing industry average (19.3x)

Price to Earnings Ratio vs Fair Ratio

What is GO's PE Ratio compared to its Fair PE Ratio? This is the expected PE Ratio taking into account the company's forecast earnings growth, profit margins and other risk factors.

GO PE Ratio vs Fair Ratio.
Fair Ratio
Current PE Ratio	76x
Fair PE Ratio	24x

Price-To-Earnings vs Fair Ratio: GO is expensive based on its Price-To-Earnings Ratio (76x) compared to the estimated Fair Price-To-Earnings Ratio (24x).

Share Price vs Fair Value

What is the Fair Price of GO when looking at its future cash flows? For this estimate we use a Discounted Cash Flow model.

Below Fair Value: GO ($43.36) is trading above our estimate of fair value ($40.91)

Significantly Below Fair Value: GO is trading above our estimate of fair value.

Price to Earnings Growth Ratio

PEG Ratio: GO is poor value based on its PEG Ratio (3.5x)

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Future Growth

How is Grocery Outlet Holding forecast to perform in the next 1 to 3 years based on estimates from 13 analysts?

Future Growth Score

4/6

Future Growth Score 4/6

Earnings vs Savings Rate
Earnings vs Market
High Growth Earnings
Revenue vs Market
High Growth Revenue
Future ROE

21.4%

Forecasted annual earnings growth

Earnings and Revenue Growth Forecasts

Analyst Future Growth Forecasts

Earnings vs Savings Rate: GO's forecast earnings growth (21.4% per year) is above the savings rate (1.9%).

Earnings vs Market: GO's earnings (21.4% per year) are forecast to grow faster than the US market (13.9% per year).

High Growth Earnings: GO's earnings are expected to grow significantly over the next 3 years.

Revenue vs Market: GO's revenue (10.1% per year) is forecast to grow faster than the US market (8.4% per year).

High Growth Revenue: GO's revenue (10.1% per year) is forecast to grow slower than 20% per year.

Earnings per Share Growth Forecasts

Future Return on Equity

Future ROE: GO's Return on Equity is forecast to be low in 3 years time (8.8%).

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Past Performance

How has Grocery Outlet Holding performed over the past 5 years?

Past Performance Score

2/6

Past Performance Score 2/6

Quality Earnings
Growing Profit Margin
Earnings Trend
Accelerating Growth
Earnings vs Industry
High ROE

45.9%

Historical annual earnings growth

Earnings and Revenue History

Quality Earnings: GO has high quality earnings.

Growing Profit Margin: GO's current net profit margins (1.7%) are lower than last year (3.6%).

Past Earnings Growth Analysis

Earnings Trend: GO's earnings have grown significantly by 45.9% per year over the past 5 years.

Accelerating Growth: GO's has had negative earnings growth over the past year, so it can't be compared to its 5-year average.

Earnings vs Industry: GO had negative earnings growth (-51.3%) over the past year, making it difficult to compare to the Consumer Retailing industry average (17.1%).

Return on Equity

High ROE: GO's Return on Equity (5.4%) is considered low.

Discover strong past performing companies

Financial Health

How is Grocery Outlet Holding's financial position?

Financial Health Score

4/6

Financial Health Score 4/6

Short Term Liabilities
Long Term Liabilities
Debt Level
Reducing Debt
Debt Coverage
Interest Coverage

Financial Position Analysis

Short Term Liabilities: GO's short term assets ($461.1M) exceed its short term liabilities ($242.2M).

Long Term Liabilities: GO's short term assets ($461.1M) do not cover its long term liabilities ($1.4B).

Debt to Equity History and Analysis

Debt Level: GO's net debt to equity ratio (30.7%) is considered satisfactory.

Reducing Debt: Insufficient data to determine if GO's debt to equity ratio has reduced over the past 5 years.

Debt Coverage: GO's debt is well covered by operating cash flow (38.8%).

Interest Coverage: GO's interest payments on its debt are well covered by EBIT (5.5x coverage).

Balance Sheet

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Dividend

What is Grocery Outlet Holding current dividend yield, its reliability and sustainability?

Dividend Score

0/6

Dividend Score 0/6

Notable Dividend
High Dividend
Stable Dividend
Growing Dividend
Earnings Coverage
Future Dividend Coverage

Dividend Yield vs Market

Notable Dividend: Unable to evaluate GO's dividend yield against the bottom 25% of dividend payers, as the company has not reported any recent payouts.

High Dividend: Unable to evaluate GO's dividend yield against the top 25% of dividend payers, as the company has not reported any recent payouts.

Stability and Growth of Payments

Stable Dividend: Insufficient data to determine if GO's dividends per share have been stable in the past.

Growing Dividend: Insufficient data to determine if GO's dividend payments have been increasing.

Earnings Payout to Shareholders

Earnings Coverage: Insufficient data to calculate payout ratio to determine if its dividend payments are covered by earnings.

Cash Payout to Shareholders

Cash Flow Coverage: Unable to calculate sustainability of dividends as GO has not reported any payouts.

Discover strong dividend paying companies

Management

How experienced are the management team and are they aligned to shareholders interests?

3.4yrs

Average management tenure

CEO

Eric Lindberg (50 yo)

3.42yrs

Tenure

US$4,008,964

Compensation

Mr. Eric J. Lindberg Jr., has been Chief Executive Officer of Grocery Outlet Holding Corp., and Grocery Outlet Inc since January 1, 2019 and its Director since January 2006. Previously, from January 2006 t...

CEO Compensation Analysis

Compensation vs Market: Eric's total compensation ($USD4.01M) is below average for companies of similar size in the US market ($USD6.87M).

Compensation vs Earnings: Eric's compensation has been consistent with company performance over the past year.

Leadership Team

Experienced Management: GO's management team is considered experienced (3.4 years average tenure).

Board Members

Experienced Board: GO's board of directors are considered experienced (7.7 years average tenure).

Ownership

Who are the major shareholders and have insiders been buying or selling?

Insider Trading Volume

Insider Buying: GO insiders have only sold shares in the past 3 months.

Recent Insider Transactions

Ownership Breakdown

Dilution of Shares: Shareholders have not been meaningfully diluted in the past year.

Data	Last Updated (UTC time)
Company Analysis	2022/06/27 00:00
End of Day Share Price	2022/06/27 00:00
Earnings	2022/04/02
Annual Earnings	2022/01/01