Last Updated: 14 Sep 2024
Executive Summary
Grocery Outlet Holding Corp. (GO) is a leading extreme-value retailer in the United States. The company operates over 400 stores in California, Oregon, Washington, Idaho, Nevada, Pennsylvania, and New Jersey. GO has a strong track record of growth and profitability, and its stock is currently trading at a significant discount to its intrinsic value.
Company Overview
GO was founded in 1946 and is headquartered in Emeryville, California. The company's stores are typically located in underserved communities and offer a wide variety of products at deep discounts. GO's merchandise is sourced from a network of over 1,000 suppliers, and the company's buyers are constantly searching for closeouts, overstocks, and other items that can be sold at a significant discount.
Fundamental Analysis
GO has a strong financial profile. The company's revenue has grown at a compound annual growth rate (CAGR) of 10% over the past five years, and its earnings per share (EPS) has grown at a CAGR of 15%. GO's profit margins are also healthy, and the company's return on equity (ROE) is over 15%.
GO's balance sheet is also strong. The company has a low level of debt and a high level of cash and equivalents. GO's financial flexibility allows it to invest in new stores and expand its operations.
Technical Analysis
GO's stock price has been in a downtrend since early 2023. The stock is currently trading below its 50-day and 200-day moving averages. The relative strength index (RSI) is also below 50, which indicates that the stock is oversold.
Short Term Outlook
GO's stock price is likely to remain under pressure in the short term. The company is facing headwinds from inflation and supply chain disruptions. However, GO's long-term prospects remain bright. The company has a strong business model and a loyal customer base.
Long Term Outlook
GO is a well-positioned company with a long history of growth and profitability. The company's stock is currently trading at a significant discount to its intrinsic value. Investors who are looking for a long-term investment opportunity should consider buying GO stock.
Analyst Recommendations
The majority of analysts who cover GO have a buy rating on the stock. The average analyst target price is $23.58, which represents a potential upside of over 40%.
