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GrowGeneration Corp. GRWG is scheduled to report third-quarter 2020 results on Nov 11, after the closing bell.
The Zacks Consensus Estimate for third-quarter total sales is pegged at $47.3 million, suggesting growth of 117% from the prior-year quarter. The consensus mark for earnings per share currently stands at 6 cents, flat year over year. Notably, the figure has remained stable over the past 30 days.
GrowGeneration reported year-over-year improvement in both its second-quarter top and bottom lines. The top line beat the Zacks Consensus Estimate. The company beat estimates in two of the trailing four quarters and missed the same twice. It has a trailing four-quarter negative earnings surprise of 83.3%, on average.
Factors to Note
The company’s online sales have been surging this year as evident from growth of 163% in the first six months of the year. The third quarter was no exception to this trend as customers stayed at home amid the pandemic.. New visitors to the company’s website are now approaching 100,000 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 thus all of its 28 stores have been in operation. Further, the company’s hydroponic garden centers experienced a 50% increase in walk-in transactions since the end of the first quarter to the end of the second quarter, and have been trending above 10,000 per week. These factors are likely to get reflected in the company’s third-quarter results.
Further, the acquisition of H2O Hydroponics, completed in June, might have contributed the to-be-reported quarter’s performance. 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 may have driven the third-quarter performance. However, 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.
What Our Model Unveils
Our proven model does not conclusively predict a beat for GrowGeneration this earnings 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. But that is not the case here as you will see below.
You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Earnings ESP: GrowGeneration’s Earnings ESP is -20.00%.
Zacks Rank: GrowGeneration currently has a Zacks Rank #3.
Shares of the company have soared 462% year to date, against the industry’s decline of 14.5%.
Stocks Poised to Beat Earnings Estimates
Here are some stocks, which you may consider as our model shows that these have the right combination of elements to post an earnings beat in their upcoming releases.
comScore, Inc. SCOR has an Earnings ESP of +29.41% and a Zacks Rank of 2, currently. You can see the complete list of today’s Zacks #1 Rank stocks here.
SeaSpine Holdings Corporation SPNE has an Earnings ESP of +6.67% and a Zacks Rank #2.
Grocery Outlet Holding Corp. GO has a Zacks Rank #2 and an Earnings ESP of +10.76%, at present.
5 Stocks Set to Double
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GrowGeneration Corp. (GRWG): Free Stock Analysis Report
comScore, Inc. (SCOR): Free Stock Analysis Report
Grocery Outlet Holding Corp. (GO): Free Stock Analysis Report
SeaSpine Holdings Corporation (SPNE): Free Stock Analysis Report
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.