Grocery Outlet (NASDAQ:GO) Trading 4% Higher - Should You Buy?

Key Points

• Grocery Outlet shares rose 4% to about $12.17, though trading volume was significantly below average.
• Analysts remain cautious: the stock has a consensus “Reduce” rating from MarketBeat, with 12 Holds and two Sells and an average price target of $10.59.
• The company beat quarterly expectations, reporting $0.20 EPS versus $0.13 expected and $1.19 billion in revenue, up 1.1% year over year; however, it posted a negative net margin and analysts expect only $0.42 EPS for the full year.

Grocery Outlet Holding Corp. (NASDAQ:GO - Get Free Report) was up 4% during mid-day trading on Friday . The stock traded as high as $12.24 and last traded at $12.17. Approximately 195,762 shares traded hands during mid-day trading, a decline of 94% from the average daily volume of 3,122,490 shares. The stock had previously closed at $11.70.

Analyst Ratings Changes

Several research analysts recently commented on GO shares. UBS Group boosted their target price on Grocery Outlet from $10.00 to $11.50 and gave the stock a "neutral" rating in a research note on Monday, August 17th. Wells Fargo & Company increased their price target on Grocery Outlet from $9.00 to $11.00 and gave the company an "equal weight" rating in a research report on Thursday, August 13th. TD Cowen reiterated a "hold" rating on shares of Grocery Outlet in a research note on Tuesday, August 18th. Telsey Advisory Group reissued a "market perform" rating on shares of Grocery Outlet in a research report on Thursday, August 13th. Finally, Roth Capital restated a "neutral" rating and set a $10.00 target price on shares of Grocery Outlet in a research note on Thursday, August 13th. Twelve analysts have rated the stock with a Hold rating and two have assigned a Sell rating to the stock. Based on data from MarketBeat.com, the stock presently has an average rating of "Reduce" and a consensus target price of $10.59.

Grocery Outlet Stock Performance

The company has a market capitalization of $1.21 billion, a price-to-earnings ratio of -3.16, a PEG ratio of 8.61 and a beta of 0.65. The company has a debt-to-equity ratio of 0.60, a current ratio of 1.29 and a quick ratio of 0.30. The stock has a 50 day simple moving average of $10.10 and a two-hundred day simple moving average of $8.77.

Grocery Outlet (NASDAQ:GO - Get Free Report) last released its quarterly earnings data on Wednesday, August 12th. The company reported $0.20 earnings per share (EPS) for the quarter, topping the consensus estimate of $0.13 by $0.07. Grocery Outlet had a positive return on equity of 5.84% and a negative net margin of 8.04%.The business had revenue of $1.19 billion during the quarter, compared to analysts' expectations of $1.17 billion. During the same period in the prior year, the firm posted $0.23 EPS. The business's quarterly revenue was up 1.1% compared to the same quarter last year. As a group, analysts anticipate that Grocery Outlet Holding Corp. will post 0.42 earnings per share for the current year.

Insider Transactions at Grocery Outlet

In related news, insider Paul Blaine Miller purchased 10,000 shares of the company's stock in a transaction on Thursday, June 18th. The shares were bought at an average cost of $9.37 per share, for a total transaction of $93,700.00. Following the completion of the purchase, the insider directly owned 59,171 shares of the company's stock, valued at approximately $554,432.27. This trade represents a 20.34% increase in their position. The purchase was disclosed in a legal filing with the SEC, which can be accessed through this link. Insiders purchased 23,000 shares of company stock valued at $228,400 over the last three months. Corporate insiders own 5.60% of the company's stock.

Institutional Trading of Grocery Outlet

Several institutional investors have recently modified their holdings of the stock. BlackRock Inc. purchased a new position in shares of Grocery Outlet in the 2nd quarter valued at $152,440,000. T. Rowe Price Investment Management Inc. lifted its position in Grocery Outlet by 54.0% in the fourth quarter. T. Rowe Price Investment Management Inc. now owns 15,763,945 shares of the company's stock valued at $159,216,000 after acquiring an additional 5,528,722 shares during the last quarter. Millennium Management LLC boosted its stake in Grocery Outlet by 3,558.0% in the third quarter. Millennium Management LLC now owns 1,825,407 shares of the company's stock valued at $29,298,000 after acquiring an additional 1,775,505 shares in the last quarter. UBS Group AG boosted its stake in Grocery Outlet by 87.6% in the fourth quarter. UBS Group AG now owns 2,726,299 shares of the company's stock valued at $27,536,000 after acquiring an additional 1,272,859 shares in the last quarter. Finally, Solas Capital Management LLC purchased a new position in shares of Grocery Outlet during the second quarter worth about $11,368,000. Hedge funds and other institutional investors own 99.87% of the company's stock.

Grocery Outlet Company Profile

Grocery Outlet Holding Corp. NASDAQ: GO is a specialty discount retailer that offers consumers deeply discounted groceries by purchasing excess inventory, closeouts, and overstocks from manufacturers and distributors. Headquartered in Emeryville, California, the company operates two primary banners—Grocery Outlet and Fresh2Go—with a combined footprint of more than 400 stores. Its product assortment spans fresh produce, meat, dairy, bakery items, household staples, natural and organic offerings, and select specialty products, all sold at significant markdowns compared to conventional supermarkets.

The company's unique buying model enables it to source inventory through opportunistic purchases of surplus freight, discontinued items, and closeout deals, which it then passes on as savings to its customers.

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