GrowGeneration Stock Soars on Record Preliminary 2020 Results

GrowGeneration Corp Raises Guidance Again

GrowGeneration Corp (NASDAQ:GRWG) was the best-performing pot stock in 2020, soaring 844%.

The momentum that carried GrowGeneration stock significantly higher in 2020 has carried into 2021. And the outlook for GRWG stock remains bullish.

On January 11, a day when most markets were in the red, GrowGeneration stock ripped higher on record preliminary full-year 2020 revenue. GrowGeneration Corp also increased its guidance for full-year 2021—again.

Trading at $49.83 as of this writing, GRWG stock has climbed more than 22% year-to-date and 920% year-over-year.

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About GrowGeneration Corp

Some still view the cannabis industry as being the Wild West: unpredictable and uncertain.

It’s not the Wild West, but if it was, GrowGeneration would be the corner store that welcomes prospectors as they enter town. That’s because GrowGeneration is what’s known as a pick-and-shovel stock.

The Denver, CO-based company is the largest hydroponics and organic garden supplier in the U.S. (Source: “Investor Presentation: October, 2020,” GrowGeneration Corp, last accessed January 12, 2021.)

It has 39 retail stores in 11 states, including 13 location in California, six in Michigan, five in Colorado, and two in Nevada. It also operates stores in Arizona, Washington, Rhode Island, Oklahoma, Oregon, Maine, and Florida. (Source: “GrowGeneration Preannounces Record Full-Year 2020 Revenues and Increases Preliminary 2021 Guidance,” GrowGeneration Corp, January 11, 2021.)

GrowGeneration Corp also operates an online superstore that sells more than 10,000 hydroponics products. It has everything needed to grow pot, tomatoes, or anything else leafy—either indoors or out. In addition to selling to individual growers, GrowGeneration sells to large multi-state operators.

The company says its goal is to own and operate GrowGeneration-branded stores in all major U.S. states and Canada. One of the biggest drivers of growth for GrowGeneration has been its aggressive acquisition strategy.

During 2020, the company started up or acquired 14 new stores, increasing the number of its locations nationwide to 39. It also announced more than 10 strategic acquisitions.

On December 23, the company announced the acquisition of Southern CA-based Canopy Crop Management and its portfolio of products, including the “Power SI” brand of fertilizers. (Source: “GrowGeneration Acquires Assets of Canopy Crop Management,” GrowGeneration Corp, December 23, 2020.)

By the end of 2021, the company expects to be operating 55 stores. GrowGeneration is essentially shaping up to be the Home Depot Inc (NYSE:HD) of the legal cannabis industry.

Record Preliminary 2020 Results

The company’s acquisitions have helped juice its revenue and earnings.

On January 11, GrowGeneration reported its preliminary financial results for full-year 2020. The company announced that its preliminary 2020 revenue increased 140% year-over-year to a record $192.0 million, with same-store sales increasing by 63%. (Source: GrowGeneration Corp, January 11, 2021, op. cit.)

During the fourth quarter, its revenue advanced 142% year-over-year to $61.5 million and its same-stores sales increased by 58%.

As GrowGeneration Corp continues to outpace its guidance, it has increased its 2021 revenue guidance to the range of $335.0–$350.0 million. In the third quarter, the company had expected to report 2021 revenue in the range of $280.0–$300.0 million.

GrowGeneration has also increased its 2021 adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) guidance to the range of $38.0– $40.0 million, up from previous full-year 2021 adjusted EBITDA guidance in the range of $34.0–$36.0 million.

Analyst Take

GrowGeneration Corp continues to grow and trounce the broader market.

Despite a year full of unprecedented challenges and economic uncertainty, GrowGeneration stock delivered strong shareholder value in 2020, with triple-digit revenue growth. That’s expected to continue in 2021.