Assessing Grocery Outlet (GO) Valuation After Lowered 2025 Outlook and Sharply Reduced Earnings

Grocery Outlet Holding (GO) just issued a lower earnings outlook for 2025, with reduced net sales and comparable store sales expectations. At the same time, the company’s third quarter saw net income drop sharply from last year.

See our latest analysis for Grocery Outlet Holding.

It has been a tough stretch for Grocery Outlet Holding, with the share price falling 13.96% over the past month and sliding 23.74% over the last 90 days. Confidence has wavered following lowered earnings guidance and a notable decline in quarterly net income. While the 1-year total shareholder return is down just 2.68%, the long-term picture highlights the challenge. The 5-year total return of -66.61% suggests momentum is still fading in the face of recent headwinds.

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With the stock under pressure and analyst price targets now well above the current level, investors are left to wonder: does the recent slump make Grocery Outlet Holding a potential bargain, or is the market fairly pricing in slower growth ahead?

Most Popular Narrative: 17% Undervalued

Compared to its last close at $14.17, the most popular narrative assigns Grocery Outlet Holding a fair value close to $17.15, suggesting the share price may not be capturing the company’s full recovery or longer-term potential. The current gap spotlights a tug-of-war between near-term challenges and the belief in significant future earnings growth. Here’s what underpins this outlook.

The market seems to be pricing in further margin expansion from improved private label penetration and opportunistic inventory buying. However, long-term industry dynamics, such as CPG supply chain tightening and greater supplier consolidation, could constrain the supply of discounted branded inventory and compress gross margins.

Read the complete narrative.

Want to unravel what’s driving this valuation gap? The narrative teases ambitious profit expansion, margin moves, and future multiples that could surprise many. Craving the inside details that shape this fair value? The full narrative reveals where the real bets and bold assumptions are hiding.

Result: Fair Value of $17.15 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, persistent wage inflation or slower than expected growth outside core markets could still undermine the optimistic outlook for Grocery Outlet Holding’s recovery.

Find out about the key risks to this Grocery Outlet Holding narrative.

Build Your Own Grocery Outlet Holding Narrative

If you think there’s more to Grocery Outlet Holding’s story, or want to run the numbers yourself, you can shape your own take in just a few minutes, and Do it your way.

A great starting point for your Grocery Outlet Holding research is our analysis highlighting 3 key rewards and 4 important warning signs that could impact your investment decision.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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