Grocery Outlet Holding Corp. (GO) Anticipates Increased Profits: Is It a Good Time to Invest?

Grocery Outlet Holding Corp. (GO) Earnings Preview: What to Expect

Analysts on Wall Street anticipate that Grocery Outlet Holding Corp. (GO) will report higher earnings and increased revenue for the quarter ending December 2025. While consensus estimates provide a general outlook, the actual results compared to these expectations could play a significant role in determining the stock’s short-term movement.

If the company’s reported figures surpass forecasts when results are released on March 4, the stock could see an uptick. Conversely, missing estimates may lead to a decline in share price.

Management’s commentary during the earnings call will be crucial for understanding whether any immediate price changes are sustainable and for shaping future earnings expectations. However, it’s also valuable to consider the likelihood of an earnings-per-share (EPS) surprise.

Current Analyst Estimates

Grocery Outlet, known for offering discounted and overstocked goods, is projected to announce quarterly earnings of $0.21 per share, reflecting a 40% increase compared to the same period last year.

Revenue is forecasted to reach $1.24 billion, which would represent a 12.5% rise year-over-year.

Trends in Estimate Revisions

Over the past month, the consensus EPS estimate for the quarter has been adjusted downward by 2.17%. This shift indicates that analysts have recently become slightly less optimistic about the company’s performance.

It’s important to note that the overall change in estimates may not capture the direction of every individual analyst’s revision.

Understanding the Earnings ESP Model

Changes in analyst estimates before an earnings release can provide insight into the company’s business environment for the period. The Zacks Earnings ESP (Expected Surprise Prediction) model is designed to help predict whether a company will beat consensus estimates.

This model compares the Most Accurate Estimate to the Zacks Consensus Estimate for the quarter. The Most Accurate Estimate is typically the most recent forecast, which may incorporate the latest available information. If analysts update their projections just before the earnings release, these adjustments could be more reliable than earlier predictions.

A positive or negative Earnings ESP reading suggests the potential for actual earnings to differ from consensus expectations. However, the model is most effective at predicting positive surprises.

When a stock has a positive Earnings ESP and a Zacks Rank of #1 (Strong Buy), #2 (Buy), or #3 (Hold), there is a strong chance of an earnings beat. Research indicates that this combination results in a positive surprise nearly 70% of the time, and a higher Zacks Rank further enhances the model’s accuracy.

It’s important to remember that a negative Earnings ESP does not necessarily mean the company will miss estimates. The model is less reliable for predicting misses, especially for stocks with a Zacks Rank of #4 (Sell) or #5 (Strong Sell).

Recent Performance and Analyst Sentiment for Grocery Outlet

For Grocery Outlet, the Most Accurate Estimate currently exceeds the Zacks Consensus Estimate, indicating that analysts have recently become more optimistic about the company’s earnings outlook. This results in an Earnings ESP of +0.04%.

However, the stock holds a Zacks Rank of #4, which complicates the prediction of an earnings beat this quarter.

Does Past Earnings Surprise Matter?

Analysts often review a company’s history of meeting or exceeding consensus estimates when forecasting future results. Examining this track record can provide context for the upcoming report.

In the previous quarter, Grocery Outlet was expected to earn $0.19 per share but reported $0.21, delivering a positive surprise of 10.53%.

Over the past four quarters, the company has surpassed consensus EPS estimates three times.

Key Takeaways

While beating or missing earnings estimates can influence a stock’s price, other factors may also drive performance. Sometimes, stocks decline even after an earnings beat if other aspects disappoint investors, and unexpected catalysts can lift stocks despite a miss.

That said, focusing on companies likely to exceed earnings expectations can improve investment outcomes. Checking a company’s Earnings ESP and Zacks Rank before earnings releases can be a helpful strategy.

At this time, Grocery Outlet does not stand out as a strong candidate for an earnings beat. Investors should also consider other factors before making decisions about this stock ahead of its earnings report.

Stay informed about upcoming earnings releases.

Is Grocery Outlet Holding Corp. (GO) a Good Investment?

Before deciding to invest in Grocery Outlet Holding Corp. (GO), you may want to explore the top stock picks for the next month.

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This article was originally published by Zacks Investment Research.

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