Various consumer-oriented features of grocery retail stores, such as fair price, quality, and variety of products, as well as rising adoption of e-commerce platforms, are driving the attractiveness of grocery retail among consumers, which drives the growth of the global grocery retail market. The global grocery retail industry is expected to grow at a CAGR of 6.9% by 2031.

Additionally, retailers are using AI-powered tools like product review summaries, chatbots, and shopping assistants to simplify purchasing decisions, minimize obstacles, and boost conversions. This adoption of technology utilizes data analytics to forecast trends and improve customer satisfaction.

Against this backdrop, let’s compare two grocery stocks to analyze which grocery stock is a better investment: Weis Markets, Inc. (WMK - Get Rating) and Grocery Outlet Holding Corp. (GO - Get Rating).

The Case for Weis Markets, Inc. Stock

With a $1.78 billion market cap, Weis Markets, Inc. (WMK - Get Rating) engages in the retail sale of food through a chain of supermarkets in Pennsylvania and surrounding states. The company’s retail food stores sell groceries, dairy products, frozen foods, meats, seafood, fresh produce, floral, pharmacy services, and general merchandise items. 

WMK’s stock has gained 5.2% over the past year to close the last trading session at $66.09.

WMK’s 2.38x trailing-12-month asset turnover ratio is 172.6% higher than the 0.87x industry average. Also, its 4.63% trailing-12-month Return on Total Assets is 18.2% higher than the 3.91% industry average.

WMK’s net sales for the third quarter, which ended on September 28, 2024, increased 2.2% year-over-year to $1.19 billion. In addition, the company’s non-GAAP net income was $25.84 million, or $0.96 per share, up 11.3% and 11.6% from the prior year’s quarter, respectively.

WMK’s POWR Ratings reflect its promising outlook. The stock has an overall rating of A, which translates to a Strong Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.

The stock has a B grade for Quality, Stability, and Value. WMK is ranked #6 out of 35 stocks in the Grocery/Big Box Retailers industry.

In addition to the POWR Ratings I’ve just highlighted, you can see WMK’s ratings for Momentum, Growth, and Sentiment here.

The Case for Grocery Outlet Holding Corp. Stock

Valued at $1.55 billion by market cap, Grocery Outlet Holding Corp. (GO - Get Rating) is a retailer of consumables and fresh products. The company offers products like dairy, fresh meat, grocery, and general merchandise.

Shares of GO have plunged 43.2% over the past nine months to close the last trading session at $15.95.

In terms of the trailing-12-month CAPEX/Sales, GO’s 4.31% is 40.6% higher than the 3.06% industry average. However, its 30.42% trailing-12-month gross profit margin is 14.6% lower than the 35.64% industry average.

For the third quarter that ended September 28, 2024, GO reported net sales of $1.11 billion, up 10.4% from the prior year’s quarter. Its gross profit for the quarter grew 9.2% from the year-ago value to $344.87 million. The company’s net income came in at $24.18 million and $0.24 per share, respectively.

Analysts expect GO’s revenue for the fourth quarter (ended December 2024) to come in at $1.09 billion, indicating an increase of 9.8% year-over-year. However, its EPS is expected to decline 7.5% year-over-year to $0.17 for the same period.

GO’s fundamentals are reflected in its POWR Ratings. The stock has an overall C rating, translating to Neutral in our proprietary rating system.

GO has a C grade for Momentum, Quality, Growth, Value, and Stability. It is ranked #35 in the same industry.

Click here for the additional POWR Ratings for GO (Sentiment).

Weis Markets (WMK) vs. Grocery Outlet (GO): Which Grocery Stock Is a Better Investment?

The U.S. grocery industry is projected to continue its growth with an emphasis on digital transformation, including expanded online shopping and delivery services. Trends such as personalized nutrition, sustainable packaging, and automation are expected to shape consumer experiences and industry competition.

Notable grocery retailers WMK and GO stand to capitalize on the optimistic industry outlook. However, WMK’s solid profitability might make it the better grocery stock pick.

Our research shows that the odds of success increase when one invests in stocks with an Overall Rating of Strong Buy or Buy. View all the top-rated stocks in the Grocery/Big Box Retailers industry here.

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WMK shares were trading at $63.01 per share on Wednesday afternoon, down $3.08 (-4.66%). Year-to-date, WMK has declined -6.96%, versus a 3.61% rise in the benchmark S&P 500 index during the same period.

About the Author: Nidhi Agarwal

Nidhi is passionate about the capital market and wealth management, which led her to pursue a career as an investment analyst. She holds a bachelor's degree in finance and marketing and is pursuing the CFA program. Her fundamental approach to analyzing stocks helps investors identify the best investment opportunities. More...

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