It’s been a sad week for GrowGeneration Corp. (NASDAQ:GRWG), who’ve watched their investment drop 12% to US$1.81 in the week since the company reported its quarterly result. It was a pretty bad result overall; while revenues were in line with expectations at US$54m, statutory losses exploded to US$0.10 per share. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.
Check out our latest analysis for GrowGeneration
Following the recent earnings report, the consensus from six analysts covering GrowGeneration is for revenues of US$197.6m in 2024. This implies a perceptible 4.3% decline in revenue compared to the last 12 months. The loss per share is expected to greatly reduce in the near future, narrowing 54% to US$0.38. Before this earnings announcement, the analysts had been modelling revenues of US$199.0m and losses of US$0.37 per share in 2024. Overall it looks as though the analysts were a bit mixed on the latest consensus updates. Although revenue forecasts held steady, the consensus also made a pronounced increase to its losses per share forecasts.
The consensus price target held steady at US$3.10, seemingly implying that the higher forecast losses are not expected to have a long term impact on the company’s valuation. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. Currently, the most bullish analyst values GrowGeneration at US$4.00 per share, while the most bearish prices it at US$2.25. These price targets show that analysts do have some differing views on the business, but the estimates do not vary enough to suggest to us that some are betting on wild success or utter failure.
Of course, another way to look at these forecasts is to place them into context against the industry itself. These estimates imply that revenue is expected to slow, with a forecast annualised decline of 8.5% by the end of 2024. This indicates a significant reduction from annual growth of 15% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 4.8% annually for the foreseeable future. So although its revenues are forecast to shrink, this cloud does not come with a silver lining – GrowGeneration is expected to lag the wider industry.
The Bottom Line
The most important thing to take away is that the analysts increased their loss per share estimates for next year. Fortunately, the analysts also reconfirmed their revenue estimates, suggesting that it’s tracking in line with expectations. Although our data does suggest that GrowGeneration’s revenue is expected to perform worse than the wider industry. The consensus price target held steady at US$3.10, with the latest estimates not enough to have an impact on their price targets.
Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year’s earnings. We have estimates – from multiple GrowGeneration analysts – going out to 2026, and you can see them free on our platform here.
And what about risks? Every company has them, and we’ve spotted 1 warning sign for GrowGeneration you should know about.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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