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GrowGeneration Slides 5% on Q1 Results Despite Beats

By Eric Volkman - May 13, 2021 at 4:48PM

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The company also raised its guidance on 2021 revenue and adjusted EBITDA.

GrowGeneration's (GRWG 5.69%) status as a favored marijuana stock took a bit of a ding on Thursday after the hydroponics retailer reported its first-quarter results.

For the quarter, fueled by both organic growth and a raft of acquisitions, revenue rose 173% on a year-over-year basis to $90 million. Same-store sales across that stretch of time improved by 51%. GrowGeneration also managed a flip on the bottom line, with a net profit exceeding $6.1 million ($0.10 per share) versus the year-ago loss of almost $2.1 million.

Marijuana plants growing under LED lights.

Image source: Getty Images.

Both headline numbers topped the average analyst estimates, which called for $87.1 million in revenue and a per-share net profit of $0.07.

Encouragingly, the company seems to be improving efficiency even as it bulks up with fresh asset buys. In the earnings release, it quoted CEO Darren Lampert as saying: "I am proud and encouraged with our 110 basis point increase in gross profit margin and 510 basis point increase in adjusted EBITDA margin. These increases were accomplished despite port delays and supply chain interruptions."

GrowGeneration believes its growth momentum will accelerate. The company raised its guidance for full-year 2021 revenue to a range of $450 million to $470 million, which it didn't hesitate to say would be over twice the 2020 take of $193 million. Adjusted EBITDA should land at $54 million to $58 million, significantly higher last year's $19.2 million. No net income estimates were provided.

Given these numerous positive developments and the twin beats, it's a bit baffling that investors traded GrowGeneration stock down on Thursday. It closed 2.8% lower while the S&P 500 index rose by 1.2%.

Eric Volkman has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends GrowGeneration Corp. The Motley Fool has a disclosure policy.

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