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GrowGeneration Corp. GRWG has revised its financial guidance for the fourth quarter of 2021 and the full year. Management stated that GRWG delivered triple digit revenue growth in 2021 despite persistent challenges and an uncertain operating environment. The company suffered unforeseen pressures in fourth-quarter 2021, stemming from the slowdown in the hydroponics market.
Considering the above-mentioned factors, GrowGeneration now expects annual revenues between $420 million and $422 million, up from $193 million reported in 2020. Previously, GRWG provided revenue guidance for 2021 between $435 and $440 million.
Same-store sales for the full year are expected to grow 24.4%. GrowGeneration witnessed 63% same-store sales growth in 2020. Adjusted EBITDA for 2021 is expected between $31.5 million and $33.5 million, up from $19.2 million reported in 2020.
For the December quarter, GrowGeneration projects revenues in the band of $88-$90 million, higher than the prior-year quarter’s tally of $62 million. Same-store sales for the quarter are expected to decline 12.3% against 58% growth in the prior-year quarter. GRWG expects to incur an adjusted EBITDA loss of $2-$4 million for the October-December months.
In 2021, GrowGeneration added 24 new store locations, bringing the current tally to 62 stores across 13 states. GRWG is scheduled to open a sixth Oklahoma location in Ardmore in the first quarter of 2022.
Recently, GrowGeneration acquired all the assets of mobile shelving manufacturing and warehouse facility Mobile Media, Inc and MMI Agriculture for a combined cash and stock deal value of $9.4 million. The buyout supports GRWG’s focus on expanding its indoor vertical farming solutions, which will help drive revenues over the long term.
GrowGeneration is poised to deliver improved revenue and EBITDA growth in 2022, driven by its consistent focus on energies and investments in new greenfield stores, distribution capabilities, business technology, private and proprietary brands as well as integration of the e-commerce distribution channels.
– Zacks
Price Performance
In the past year, GrowGeneration’s shares have lost 80.6% against the industry’s rally of 22.5%.
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Zacks Rank & Stocks to Consider
GrowGeneration currently carries a Zacks Rank #4 (Sell).
Some better-ranked stocks from the basic materials space are Commercial Metals Company CMC, Haynes International, Inc. HAYN and AdvanSix Inc. ASIX. While Commercial Metals and Haynes sport a Zacks Rank #1 (Strong Buy), AdvanSix carries a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Commercial Metals has an expected earnings growth rate of 10.5% for the current fiscal year. The Zacks Consensus Estimate for CMC’s current-year earnings has been revised 6.6% upward in the past 60 days.
Commercial Metals’ earnings beat the Zacks Consensus Estimate in three of the trailing four quartersv and missed once, the average being 7.4%. CMC has gained 69% over a year.
Haynes has an expected earnings growth rate of 298.6% for fiscal 2022. The Zacks Consensus Estimate for fiscal 2022 earnings has been revised 53.2% upward in the past 60 days.
Haynes’ bottom line beat the Zacks Consensus Estimate in three of the trailing four quarters, the average surprise being 83.1%. HAYN has rallied 76.7% over a year.
AdvanSix has an expected earnings growth rate of 194.5% for the current year. The Zacks Consensus Estimate for current-year earnings has moved 14.1% north in the past 60 days.
AdvanSix’s bottom line beat the Zacks Consensus Estimate in each of the trailing four quarters, the average being 47%. ASIX has soared 127.6% over a year.
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