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GrowGeneration Reports Record Revenues: Why We Like this Marijuana Stock

GrowGeneration Reports Record Revenues: Why we like this marijuana stockGrowGeneration (Nasdaq: GRWG) just reported record revenues for Q1 2020 and their stock received a nice little 17% bump from today’s news. GrowGenration’s first-quarter sales were a record $33 million, however, they did report a net loss of $2.1 million from the payout of shares in new executive agreements. 

That being said, this was GrowGeneration’s 10th consecutive quarter of record-breaking revenues. GrowGenerations record revenues for Q1 2020 even surpassed analysts’ expectations of $31 million. 

This ancillary cannabis stock sells organic gardening and hydroponic equipment in 27 stores throughout the USA. It’s store in the recently legal state of Oklahoma posted revenues of $770,000 in April 2020, its first month of operation. 

GrowGneration also reported that its same-store sales revenues increased by 58% which is pretty impressive.

GrowGeneration: Why do we like this marijuana stock?

GrowGeneration: Why do we like this marijuana stock?

Strong Focus:

GrowGeneration is one of the largest specialty organic and hydroponic gardening retail chains across the United States. GrowGeneration focuses on expanding to new markets by opening new retail centers, acquiring cannabis cultivation licenses in target states, acquiring new companies, and maintaining its positive financial growth.GrowGeneration is one of the largest specialty organic and hydroponic gardening retail chains across the United States. GrowGeneration aims to increase its revenue from marijuana cultivators as currently, 15 percent of its revenue comes from them.

Strong Financials:

  • Outstanding shares (diluted): 41.71 mil
    • Last Three-Quarters Revenue: $21.8 mil
    • EPS (diluted): 0.0

Strong Valuation:

  • Current share price: US $4.39
  • Price to Sales: 2.28
  • Price to Book: 3.28
  • 52 week low/high: US $2.05 to $5.75
  • EV / Revenue: 2.62

GrowGeneration: Our Marijuana Stock Recommendation

GrowGeneration: Why do we like this marijuana stock?

Should you invest in GrowGeneration? Will its stock price improve in the long term? Likely.

GrowGeneration has cash and cash equivalents worth $18 million, which is enough to provide support for its operations and expansion for the next 10 to 12 months. Given their aggressive strategy of expansion by acquisition, GrowGeneration will eventually need additional financing to acquire new companies beyond 2020.

GrowGeneration’s net profit decreased slightly to $1.05 million in the third quarter of 2019 as compared to $1.06 million in the second quarter. However, they reported a net profit margin of 4.82% which ranks them among the top 5 in the home improvement retail industry and 28th in the retail industry in the US.

GrowGeneration’s cash to debt ratio in the third quarter of 2019 was 1.93 which shows that if needed they can manage debt payments for the quarter. Their current ratio of 4.2 during the last quarter of 2019 is the highest in the retail sector.

For these reasons, we think GrowGeneration, at or near its current price of $5.45 a share, is an excellent cannabis stock investment opportunity for 2020—though as earnings increase with sales and expenses reduce then there may be additional opportunities in the future.

See our full fundamental analysis of GrowGeneration.

See our full technical analysis of GrowGeneration.

GrowGeneration Reports Record Revenues: Why we like this marijuana stock

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