GRWG stock has been showing very unusual movement this week following GrowGeneration Corp (OTCQX:GRWG) reporting solid revenue growth and profit in its fiscal first quarter.
Revenue Jumps 199%
On May 7, GrowGeneration reported year-over-year revenue growth of 199%. The company posted adjusted EBITDA of more than $600,000. During the latest quarter, the company recorded a 43% increase in store sales and managed to reduce operating costs by over 26% and corporate overheard by almost 100%.
For the quarter ended March 31, 2019, the company posted net revenue of $13.1 million, up $8.70 million from a year-ago quarter when revenue was $4.4 million. The growth is attributed to the opening of 14 new stores since the beginning of the year and to GrowGeneration's e-commerce site acquired in September last year. The e-commerce site and the 14 stores generated $9.9 million in revenue while the additional four stores opened during the quarter brought $1.7 million.
Noticeably, the company turned profitable during the quarter. GrowGeneration earned $229,421 in the latest quarter, compared to a year-ago loss of $953,430. On an adjusted basis, the company earned 2 cents a share.
GRWG stock has soared 20% in the past two trading sessions. However, currently the stock is down about 2% to $3.17.
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The cost of goods sold in the quarter increased by 195% from $3.2 million the previous quarter to $9.4 million. This was a result of sales growth, which saw an increase of 199% compared to the Q4 2018. Operational costs decreased thanks to the acquisition and opening of new stores that minimized the percentage of operating expenses relative to revenue because of higher volume and larger size.
GRWG Stock: 2019 Prospects
CEO and Co-founder, Darren Lampert, stated that with Q2 being GrowGenerations's strongest quarter, the company's net income and revenue are already currently higher compared to numbers from the first quarter. He added that the newly acquired stores and new store openings are already performing well beyond expectations. Plans are also in the process of up-listing to a larger exchange.
The company has projected its 2019 revenue to be between $60 million and $65 million.
What do you think about GRWG stock after the solid earnings?
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