U.S. markets closed
  • S&P Futures

    3,830.50
    +2.50 (+0.07%)
     
  • Dow Futures

    31,370.00
    -1.00 (-0.00%)
     
  • Nasdaq Futures

    12,783.25
    -48.50 (-0.38%)
     
  • Russell 2000 Futures

    2,186.30
    -13.70 (-0.62%)
     
  • Crude Oil

    63.14
    -0.39 (-0.61%)
     
  • Gold

    1,771.40
    -4.00 (-0.23%)
     
  • Silver

    27.42
    -0.26 (-0.96%)
     
  • EUR/USD

    1.2168
    -0.0018 (-0.15%)
     
  • 10-Yr Bond

    1.5180
    +0.1290 (+9.29%)
     
  • Vix

    28.89
    +7.55 (+35.38%)
     
  • GBP/USD

    1.3991
    -0.0022 (-0.16%)
     
  • USD/JPY

    106.0200
    -0.2100 (-0.20%)
     
  • BTC-USD

    47,339.71
    -3,464.88 (-6.82%)
     
  • CMC Crypto 200

    943.06
    -51.61 (-5.19%)
     
  • FTSE 100

    6,651.96
    -7.01 (-0.11%)
     
  • Nikkei 225

    29,446.17
    -722.10 (-2.39%)
     

GrowGeneration (GRWG) Up 124% in 3 Months: What's Driving It?

  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.
Zacks Equity Research
·4 min read
  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.

Shares of GrowGeneration Corp. GRWG have soared 124% over the past three months compared with the industry’s growth of 18.5%. The company is benefiting from acquisition of GrowBiz, stellar third-quarter 2020 results and ongoing strength in sales — online, commercial and retail businesses. Further, its omni-channel approach launched in September 2020, which involves rebranding of its existing e-commerce operation with an aim to facilitate e-commerce across all its locations and be more customer friendly, has also contributed to this rally.

Moreover, an upward revision in earnings estimates for fiscal 2020 and 2021 reflects analysts’ confidence in the company’s potential. Over the past 90 days, the Zacks Consensus Estimate for its fiscal 2020 earnings has moved up 7% to 15 cents. Meanwhile, the same for fiscal 2021 has gone up 16% to 36 cents.

The Zacks Consensus Estimate for 2020 and 2021 earnings suggest year-over-year growth of 50% and 139%, respectively.



Let’s delve deeper and analyze the factors driving the stock.

Last month, GrowGeneration completed the buyout of GrowBiz — the third largest chain of hydroponic garden centers in the United States. The acquisition will add around $50 million to annual revenues. Following the buyout, GrowGeneration’s total number of hydroponic garden centers currently stands at 36. The company's goal is to reach 50 garden centers and 15 states in 2021. It has been active on the buyout front lately and made significant progress toward achieving this goal.

The company’s shares have gained 44% since it reported impressive third-quarter results wherein adjusted earnings improved 100% year over year to 6 cents per share. Revenues of $55 million reflected an impressive year-over-year improvement of 152%. The company also hiked revenue guidance for 2020 to $185-$190 million from the prior projection of $170-$175 million. Adjusted EBITDA is now anticipated between $19 million and $20 million, up from the previous estimate of $17-$18 million.

GrowGeneration is witnessing strong sales in both retail and online channels. In the first nine-month period of 2020, net income from store operations soared 163% to $22.6 million. The company is averaging 12,000 walk-in transactions per week. Its commercial division sells to large commercial customers, who are primarily licensed growers of medicinal and non-medicinal cannabis. In the first nine-month period of 2020, the commercial division’s revenues skyrocketed 200%. The division currently services around 1,000 commercial accounts. The company has identified over 14,000 licensed hemp and cannabis growers in the United States, and believes there is significant room to expand base of commercial customers.

For the nine months ended Sep 30, 2020, GrowGeneration’s online revenues soared 140% year over year to around $7 million. New visitors to its website are trending over 100,000 per month. The company has rebranded its existing e-commerce operation, HeavyGarden.com and GrowGen.Pro, as growgeneration.com, which will be an omni-channel sales approach to facilitate e-commerce across all its locations. It will be customer friendly and provide the delivery option or pick-up from store. This initiative is expected to bolster the company’s sales.

Zacks Rank & Stocks to Consider

GrowGeneration currently carries a Zacks Rank #3 (Hold)

Some better-ranked stocks in the basic materials space are Bunge Limited BG, Koppers Holdings Inc. KOP and Rayonier Advanced Materials Inc. RYAM. While Bunge sports a Zacks Rank #1 (Strong Buy), Koppers Holdings and Rayonier Advanced Materials carry a Zacks Rank #2 (Buy), at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Bunge has a projected earnings growth rate of 43% for fiscal 2020. The stock has gained 27% in the past three months.

Koppers Holdings has an expected earnings growth rate of 16% for the current year. Over the past three months, the company’s shares have appreciated 13%.

Rayonier Advanced Materials has an estimated earnings growth rate of 92% for fiscal 2020. Its shares have surged 91% over the last three months.

Legal Marijuana: An Investor’s Dream

Imagine getting in early on a young industry primed to skyrocket from $17.7 billion in 2019 to an expected $73.6 billion by 2027.

Although marijuana stocks did better as the pandemic took hold than the market as a whole, they’ve been pushed down. This is exactly the right time to get in on selected strong companies at a fraction of their value before COVID struck. Zacks’ Special Report, Marijuana Moneymakers, reveals 10 exciting tickers for urgent consideration.

Download Marijuana Moneymakers FREE >>


Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
GrowGeneration Corp. (GRWG) : Free Stock Analysis Report
 
Koppers Holdings Inc. (KOP) : Free Stock Analysis Report
 
Bunge Limited (BG) : Free Stock Analysis Report
 
Rayonier Advanced Materials Inc. (RYAM) : Free Stock Analysis Report
 
To read this article on Zacks.com click here.
 
Zacks Investment Research