GO - Embedded Expectations Analysis - 2021 04 26
Grocery Outlet Holding Corp. (GO:USA) currently trades at a historical high relative to UAFRS-based (Uniform) earnings, with a 56.7x Uniform P/E. At these levels, the market is pricing in bullish expectations for the firm, but management may have concerns about available supply opportunities, EBITDA margins, and wage pressuresSpecifically, management may lack confidence in their ability to achieve their 2021 store opening target, maintain EBITDA margins, and continue meeting customer needs. In addition, they may be exaggerating the availability of attractive supply opportunities and the strength and flexibility of their business model. Furthermore, management may have concerns about their infrastructure investment spending, wage inflation pressure at Independent Operator (IO) stores, and their store opening costs. Finally, they may lack confidence in their ability to find new properties with low rents, and they may be concerned about the impact of seasonal headwinds on gross margins
Grocery Outlet is a holding company. Through its subsidiaries, the company owns and operates a chain of grocery stores in the United States. The company offers products in various categories, such as grocery, dairy and deli, produce, refrigerated and frozen, floral, beer and wine, general merchandise, and health and beauty care, as well as fresh meat and seafood; and natural, organic, specialty, and healthy products. As of Mar. 30, 2019, the company operates 323 stores across the West Coast and Pennsylvania, including the company's expansion into Southern California.
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