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GrowGeneration (GRWG) Beats on Q1 Earnings, Raises '21 View

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·3 min read
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GrowGeneration Corp. GRWG reported first-quarter 2021 record earnings per share of 10 cents, which marked a turnaround from a loss of 6 cent per share in the prior-year quarter. It also beat the Zacks Consensus Estimate of earnings of 7 cents per share. The company’s continued focus on rapid, strategic growth in key markets both organically and through acquisitions, and efforts to reduce operational costs have aided results.

The company generated revenues of $902 million in first-quarter 2021, reflecting a whopping year-over-year growth of 173%. The top line surpassed the Zacks Consensus Estimate of $87.3 million. Comparable Store Sales for the quarter was up 51% from the last year. Growth in e-commerce channel and Private-label sales also contributed to the upside.

Store operating costs were around $8.2 million compared with $3.6 million in the prior-year quarter. As a percentage of revenues, store operating costs were 9% compared with 11% for the last-year quarter. Gross profit soared 184% year over year to $25 million. Gross margin expanded 100 basis points to 28.2% from the last year quarter. Adjusted EBITDA was $11 million in the reported quarter, reflecting a surge of 364%. Adjusted EBITDA margin was 12.3% compared with 7.2% in the year-ago quarter.

Financial Performance

GrowGeneration reported cash and cash equivalents of around $92 million at the end of the first quarter of 2021, down from $178 million at the end of 2020. As of Mar 31, 2021, long-term debt was $131 million, down from $158 million as of Dec 31, 2020. So far this year, the company has made nine acquisitions, adding 15 hydroponic retail locations, taking its total store tally to 53.

2021 Guidance

The company hiked its revenue guidance for 2021 to $450-$470 million. The company had reported revenues of $193 million in 2020. Full-year adjusted EBITDA guidance has been raised to the range of $54 million to $58 million.

Share Price Performance

Over the past year, GrowGeneration has soared 570.9% compared with the industry’s rally of 102.7%.

Zacks Rank & Stocks to Consider

GrowGeneration currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the basic materials space include ArcelorMittal MT, Celanese Corp. CE and Dow Inc. DOW. All of these stocks flaunt a Zacks Rank #1 (Strong Buy) currently. You can see the complete list of today’s Zacks #1 Rank stocks here.

ArcelorMittal has a projected earnings growth rate of 984.7% for the current fiscal year. The company’s shares have soared nearly 277% in the past year.

Celanese has an expected earnings growth rate of 68.3% for the current fiscal year. The company’s shares have rallied around 114% over the past year.

Dow has a projected earnings growth rate of 261.6% for the current fiscal year. The company’s shares have gained roughly 102% in a year’s time.

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