Stock Story -
What Happened: Shares of discount grocery store chain Grocery Outlet (NASDAQ:GO) jumped 11.9% in the morning session after the company reported second-quarter earnings results. Grocery Outlet blew past analysts' EPS expectations this quarter. Its revenue also outperformed Wall Street's estimates. Management largely reaffirmed full year guidance, showing that the company remains on track. Overall, this was a solid quarter.
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What is the market telling us: Grocery Outlet's shares are not very volatile than the market average and over the last year have had only 6 moves greater than 5%. Moves this big are very rare for Grocery Outlet and that is indicating to us that this news had a significant impact on the market's perception of the business.
The biggest move we wrote about over the last year was 3 months ago, when the stock dropped 23.9% on the news that the company reported first-quarter earnings results. Adjusted EBITDA missed by a meaningful amount, and the company's full-year earnings forecast missed analysts' expectations. The company also called out systems conversion issues, which negatively impacted profit.
On the other hand, Grocery Outlet beat analysts' revenue expectations during the quarter, driven by an increase in transaction count, and partially offset by a decline in average transaction size. Overall, this was a mediocre quarter for Grocery Outlet.
Grocery Outlet is down 28.5% since the beginning of the year, and at $19.56 per share it is trading 43.6% below its 52-week high of $34.68 from August 2023. Investors who bought $1,000 worth of Grocery Outlet's shares 5 years ago would now be looking at an investment worth $517.53.
