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GrowGeneration Corp. GRWG recently opened a new hydroponic garden center in Ardmore, OK, marking its sixth location in the city. The center also marks the company’s 63rd store location in the United States.
The new location is 25,000 square feet and ideally located in southern Oklahoma at National Highway 35 near the Texas border. Management stated that the new location will deliver solutions for all types of growers with its wide range of collections and top-notch service.
GrowGeneration opened more than 9,000 licensed farms in Oklahoma City in the past three years since the city legalized medical cannabis production. The number has exceeded the licensed farms in California — the world’s largest legal cannabis market. The number of retail cannabis locations in Oklahoma is more than combined locations in Colorado, Oregon, and Washington. The company’s core growth strategy is to expand the number of its retail garden centers throughout North America.
GrowGeneration opened its first store in Oklahoma in October 2018 Since then Oklahoma has been a significant new market for the company, which contributed sales of $41.8 million in 2020 compared with $11.8 million in 2019. The company has a very strong presence in this market and generated strong sales in commercial and non-commercial customers.
Recently, GrowGeneration provided financial update for fourth-quarter 2021 and revised its December-end quarter and full-year 2021 guidance. Management stated that the company delivered triple-digit revenue growth in 2021 despite persistent challenges and an uncertain operating environment. The company suffered unforeseen pressures in the fourth quarter, stemming from the slowdown in the hydroponics market. Considering these, the company now expects annual revenues between $420 million and $422 million, up from $193 million reported in 2020.
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. The company expects to incur an adjusted EBITDA loss of $2-$4 million for the October-December quarter.
In the past year, GrowGeneration’s shares have lost 83% against the industry’s rally of 16.5%.
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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. Each carrying a Zacks Rank #1 (Strong 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 quarters 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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