Grow Generation Stock Pops as Company Beats Analyst Estimates

GrowGeneration Corp. (NASDAQ: GRWG) reported revenues of $43.5 million for the second quarter of 2020 and is raising its guidance for 2020 revenue. GrowGeneration‘s new forecasted range for revenue is $170 million$175 million and the adjusted EBITDA is estimated to be $17.0 million$18.0million. Revenue guidance for  2021 is $245M$260M. Adjusted EBITDA guidance for 2021 is $26M$28M.

The stock was jumping over 13% as the company easily blew past the Yahoo Finance average analyst estimates of revenue at $36 million. Shares were lately selling at $10 in early trading. On June 29, 2020, the company was added to the Russell 3000 Index.

GrowGeneration also reported GAAP net income per share, basic, was $.07 for the second quarter vs $.04 for the same time period in 2019. This also beat the analyst average estimate for $0.05. The average price target is $10.14. The GAAP net income was $2.6 million for the second quarter vs net income of $1.1 million for the same time period in2019.

Darren Lampert, Co-Founder and CEO, said, “Our online business increased by 149%, Q2 2020 versus Q2 2019. Our commercial division generated over $9.0 million in revenues, an increase of 142% Q2 2020 versus Q2 2019. The Company added 167 new commercial customer accounts from Q1, 2020 to Q2 2020, and now services over 700 commercial accounts. We continue to see strong demand for our products that include LED lights, nutrients, additives, soils and other products that outfit and feed grower’s gardens. Our Sunleaves private-label nutrient and additives line of product is now generating over $100,000 a month in sales.”

Despite voicing earlier warnings about COVID’s effect on brick and mortar stores, the company said that its weekly walk-in transactions had increased 50 %, quarter over quarter.

Cash Cushion

GrowGeneration is sitting comfortably on a solid cash footing. The working capital was $35.2 million on June 30, 2020, vs $30.6 million on December 31, 2019. The cash on June 30, 2020, was $14.8 million, cash on December 31, 2019, was $12.98 million, and cash as of August 12, 2020, was $59.3 million. This was certainly helped with the July offering of 8,625,000 shares generating $48.3 million in gross proceeds.

Looking Ahead

The company currently has 28 locations and has set its sites on expansion. It has set a corporate goal to reach 50 stores and 15 states in 2021. Earlier this week on August 10, 2020, the company purchased the assets of Emerald City Garden, located in Concord, CA as another step towards market domination.

 

 

Debra Borchardt

Debra BorchardtDebra Borchardt

Debra Borchardt is the CEO, Co-Founder, and Editor-In-Chief of GMR. She has covered the cannabis industry for several years at Forbes, Seeking Alpha and TheStreet. Prior to becoming a financial journalist, Debra was a Vice President at Bear Stearns where she held a Series 7 and Registered Investment Advisor license. Debra has a Masters degree in Business Journalism from New York University.


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