Subscribe to Entrepreneur for $5
Subscribe

What's in Store for GrowGeneration's (GRWG) Q2 Earnings?

GrowGeneration's (GRWG) second-quarter 2021 results are likely to reflect gains from ongoing momentum in both retail and online sales, and its focus o...

By
This story originally appeared on Zacks

GrowGeneration Corp. GRWG is scheduled to report second-quarter 2021 results on Aug 12, before the market opens.

- Zacks

Q2 Estimates

The Zacks Consensus Estimate for second-quarter total sales is pegged at $113.5 million, suggesting growth of 161% from the prior-year quarter. The consensus mark for earnings per share currently stands at 12 cents, which indicates a significant improvement of 100% from earnings of 6 cents in second-quarter 2020. Earnings estimates have gone up 9% over the past 30 days.

Q1 Results

GrowGeneration reported first-quarter 2021 record adjusted earnings per share of 10 cents, which marked a turnaround from a loss of 6 cents per share in the prior-year quarter. The company generated revenues of $900 million, reflecting a whopping year-over-year growth of 173%. The company beat the Zacks Consensus Estimate on both the metrics.



The company beat earnings estimates in three of the trailing four quarters and missed once. It has a trailing four-quarter negative earnings surprise of 10.7%, on average.

Factors to Note

GrowGeneration’s online sales have been surging and the second quarter was no exception to this trend as customers preferred to stay home due to the pandemic. In the second quarter, the company launched GrowGeneration.com. which is a one-stop e-commerce destination for commercial and craft growers, with a solid inventory of over 10,000 products, ranging from organic nutrients and soils to advanced lighting technology. This newly redesigned e-commerce platform now includes the option to Buy Online Pickup in Store (BOPIS). The BOPIS service will be available at select GrowGen locations. The company noted that visitors to its website are trending more than 150,000 per month.



Sales to commercial customers, including expert growers and cultivators have been rising given the company’s continued focus on increasing commercial revenues by adding new customer accounts. GrowGeneration was marked as an essential supplier to the agricultural industry amid the pandemic, and all of its stores have been in operation. Walk-in transactions at stores have been averaging around 100,000 walk-ins per month. In addition to store openings, the company has been active on the acquisition front through second-quarter 2021 expanding its geographic presence and private label products.



All these factors are expected to have contributed to the company’s top-line performance in the to-be-reported quarter.



Higher store operating costs due to the opening of new stores and acquired stores, and higher salary expense on account of the increase in corporate staff to support expanding operations are likely to have weighed on the to-be-reported quarter’s performance. Nevertheless, the company’s focus on margin expansion strategies that include furthering the deployment of more private-label products and driving more efficiency at the purchasing level are expected to have negated these impacts and supply chain headwinds. This, in turn, might have favored the second-quarter performance.

What Our Model Unveils

Our proven model predicts an earnings beat for GrowGeneration this season. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat.



Earnings ESP: GrowGeneration has an Earnings ESP of +3.45%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.



Zacks Rank: It currently carries a Zacks Rank #2.

Price Performance

Zacks Investment Research

Image Source: Zacks Investment Research

Shares of the company have gained 356.8% in the past year compared with the industry’s growth of 57.4%.

Other Stocks Poised to Beat Earnings Estimates

Here are some other stocks, which you may consider as our model shows that these too have the right combination of elements to post an earnings beat in their upcoming releases.



Sociedad Quimica y Minera de Chile S.A. SQM has an Earnings ESP of +21.88% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.



Osisko Gold Royalties Ltd OR has an Earnings ESP of +1.19% and a Zacks Rank #3.



Wheaton Precious Metals Corp. WPM has a Zacks Rank #3 and an Earnings ESP of +1.74%, at present.



Infrastructure Stock Boom to Sweep America

A massive push to rebuild the crumbling U.S. infrastructure will soon be underway. It’s bipartisan, urgent, and inevitable. Trillions will be spent. Fortunes will be made.

The only question is “Will you get into the right stocks early when their growth potential is greatest?”

Zacks has released a Special Report to help you do just that, and today it’s free. Discover 7 special companies that look to gain the most from construction and repair to roads, bridges, and buildings, plus cargo hauling and energy transformation on an almost unimaginable scale.

Download FREE: How to Profit from Trillions on Spending for Infrastructure >>



Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

 

GrowGeneration Corp. (GRWG): Get Free Report

 

Sociedad Quimica y Minera S.A. (SQM): Free Stock Analysis Report

 

Osisko Gold Royalties Ltd (OR): Free Stock Analysis Report

 

Wheaton Precious Metals Corp. (WPM): Free Stock Analysis Report

 

To read this article on Zacks.com click here.

 

Zacks Investment Research