As Grocery Outlet Holding Corp. (GO Quick QuoteGO - Free Report) prepares to announce its first-quarter fiscal 2025 earnings results on May 6, after the market closes, investors are closely watching to see how the company has performed amid challenges and growth opportunities in the competitive grocery sector.

The Zacks Consensus Estimate for revenues is pegged at $1,128 million, suggesting a solid 8.8% improvement over the prior-year period. However, the company’s bottom line is expected to face pressure. The Zacks Consensus Estimate for earnings per share has been stable over the past 30 days at 7 cents, indicating a year-over-year decline of 22.2%.

Grocery Outlet has a trailing four-quarter negative earnings surprise of 8.3%, on average. In the last reported quarter, this Emeryville, CA-based company’s bottom line underperformed the Zacks Consensus Estimate by a margin of 11.8%. (See the Zacks Earnings Calendar to stay ahead of market-making news.)

Key Factors to Observe for Grocery Outlet's Q1 Earnings

Grocery Outlet’s emphasis on opportunistic purchasing, targeted marketing and a disciplined store expansion strategy is likely to have supported top-line growth. Its expanded product assortment, featuring a growing mix of branded and private-label items, continues to resonate with value-seeking consumers. These efforts help deepen customer engagement and increase shopping frequency. While we expect comparable store sales to remain flat for the quarter, the overall sales performance may still reflect strength from new store contributions and strategic merchandising.

The company’s collaborations with Instacart, DoorDash and Uber Technologies represent a strategic push to enhance accessibility and convenience. These same-day delivery partnerships are likely to have helped Grocery Outlet expand its reach to time-constrained shoppers and meet evolving consumer expectations. Its mobile app has gained significant traction, allowing customers to receive personalized deals and early access to promotions.

Grocery Outlet’s measured approach to store expansion and investments in supply-chain efficiency are expected to have played a pivotal role in first-quarter performance. By focusing growth on high-return markets and clustering locations, the company aims to drive better operational efficiency and capital productivity.

We note that Grocery Outlet has largely overcome the financial impacts of its system transition, but any lingering challenges could have hindered margin expansion and operational scalability. Moreover, any deleverage in SG&A expenses is likely to have exerted pressure on profitability. We expect SG&A expenses to rise by 12% in the first quarter, resulting in a 110-basis point deleverage to 30.4% of net sales.

What the Zacks Model Predicts for GO

As investors prepare for Grocery Outlet's first-quarter results, the question looms regarding earnings beat or miss. Our proven model predicts an earnings beat for Grocery Outlet this time. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat, which is the case here.

Grocery Outlet has a Zacks Rank #3 and an Earnings ESP of +12.50%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Other Stocks With the Favorable Combination

Here are three more companies you may want to consider, as our model shows that these also have the right combination of elements to post an earnings beat this season:

The Kroger Co. (KR Quick QuoteKR - Free Report) currently has an Earnings ESP of +0.46% and a Zacks Rank #3. The Zacks Consensus Estimate for first-quarter fiscal 2025 earnings per share is pegged at $1.44, suggesting 0.7% year-over-year growth. You can see the complete list of today’s Zacks #1 Rank stocks here.

Kroger’s top line is expected to increase year over year. The Zacks Consensus Estimate for quarterly revenues is pegged at $45.38 billion, which indicates a jump of 0.3% from the figure reported in the prior-year quarter. KR has a trailing four-quarter earnings surprise of 2.6%, on average.

Dollar General Corporation (DG Quick QuoteDG - Free Report) currently has an Earnings ESP of +0.99% and a Zacks Rank #3. The Zacks Consensus Estimate for first-quarter fiscal 2025 earnings per share is pegged at $1.46, suggesting an 11.5% year-over-year decline. 

Dollar General’s top line is expected to rise year over year. The Zacks Consensus Estimate for quarterly revenues is pegged at $10.25 billion, which indicates an increase of 3.4% from the figure reported in the prior-year quarter. DG has a trailing four-quarter earnings surprise of 1.2%, on average.

Casey's General Stores, Inc. (CASY Quick QuoteCASY - Free Report) currently has an Earnings ESP of +5.05% and a Zacks Rank #3. The Zacks Consensus Estimate for fourth-quarter fiscal 2025 earnings per share is pegged at $1.93, suggesting a 17.5% year-over-year decline. 

Casey's top line is expected to rise year over year. The Zacks Consensus Estimate for quarterly revenues is pegged at $3.97 billion, which indicates an increase of 10.3% from the figure reported in the prior-year quarter. CASY has a trailing four-quarter earnings surprise of 22.7%, on average.