GrowGeneration Corp. (NASDAQ: GRWG)

Sector: Consumer Cyclical Industry: Specialty Retail CIK: 0001604868
Market Cap 65.02 Mn
P/B 0.62
P/E -1.63
P/S 0.40
ROIC (Qtr) -30.35
Div Yield % 0.00
Rev 1y % (Qtr) -5.50
Total Debt (Qtr) 31.92 Mn
Debt/Equity (Qtr) 0.30
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About

GrowGeneration Corp., known by its ticker symbol GRWG, is a prominent player in the hydroponic and organic gardening industry. The company, established in 2014 and headquartered in Colorado, has grown into a multifaceted business with two primary segments: Cultivation and Gardening, and Storage Solutions. The Cultivation and Gardening segment is GrowGeneration's flagship business, focusing on the development, marketing, retail, and distribution of products for both indoor and outdoor hydroponic and organic gardening. The company's strategic approach...

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Investment thesis

Bull case

  • Healthy cash reserves of 27.36M provide 4.04x coverage of short-term debt 6.78M, demonstrating strong liquidity position and minimal refinancing risk.
  • Strong tangible asset base of 152.90M provides 4.79x coverage of total debt 31.92M, indicating robust asset backing and low credit risk.
  • Short-term investments of 21.79M provide solid 1.99x coverage of other current liabilities 10.96M, indicating strong liquidity.
  • Tangible assets of 152.90M provide robust 13.95x coverage of other current liabilities 10.96M, indicating strong asset backing.
  • Strong free cash flow of (6.71M) provides 6.62x coverage of acquisition spending (1.01M), indicating disciplined M&A strategy.

Bear case

  • Operating cash flow of (6.17M) barely covers its investment activities of 6.25M, with a coverage ratio of -0.99, indicating heavy reliance on external financing for growth which may not be sustainable in a tighter credit environment.
  • Cash reserves of 27.36M provide limited coverage of acquisition spending of (1.01M), which is -27x, suggesting aggressive expansion might strain liquidity if market conditions deteriorate.
  • The company's operating cash flow of (6.17M) shows concerning coverage of stock compensation expenses of 1.56M, with a -3.97 ratio indicating potential earnings quality issues.
  • Free cash flow of (6.71M) provides weak coverage of capital expenditures of 531000, with a -12.63 ratio suggesting additional external financing needs for growth initiatives.
  • Operating cash flow of (6.17M) provides minimal -56.14x coverage of tax expenses of 110000, suggesting potential tax planning inefficiencies or unsustainable tax positions.

Segments Breakdown of Revenue (2024)

Segments Breakdown of Revenue (2024)

Peer comparison

Companies in the Specialty Retail
S.No. Ticker Company Market Cap P/E P/S Total Debt (Qtr)
1 ULTA Ulta Beauty, Inc. 32.20 Bn 27.06 2.69 2.57 Bn
2 WSM Williams Sonoma Inc 29.62 Bn 25.19 3.40 1.47 Bn
3 TSCO Tractor Supply Co /De/ 28.42 Bn 25.23 1.93 5.72 Bn
4 DKS Dick'S Sporting Goods, Inc. 24.98 Bn 88.10 4.64 7.70 Bn
5 CASY Caseys General Stores Inc 24.65 Bn 59.49 1.65 2.92 Bn
6 BBY Best Buy Co Inc 17.85 Bn 11.66 0.41 4.09 Bn
7 MUSA Murphy USA Inc. 15.91 Bn 61.33 1.35 2.75 Bn
8 FIVE Five Below, Inc 11.68 Bn 37.94 2.64 2.01 Bn

Industry comparisons

Current Valuation Value Ind Avg Percentile
EV to Assets EV to Assets 0.47 2.23
EV to Cash from Ops. EV/CFO -12.13 14.70
EV to Debt EV to Debt 2.35 79.39
EV to EBIT EV/EBIT -1.88 -40.16
EV to EBITDA EV/EBITDA -2.89 11.51
EV to Free Cash Flow [EV/FCF] EV/FCF -11.17 -286.14
EV to Market Cap EV to Market Cap 1.15 6.33
EV to Revenue EV/Rev 0.46 2.39
Price to Book Value [P/B] P/B 0.62 32.78
Price to Earnings [P/E] P/E -1.63 -36.32
Dividend Metrics Value Ind Avg Percentile
Dividend Coverage Ratio Dividend Coverage Ratio 0.00 -4.05
Dividend Payout Ratio % Div Payout % (Qtr) 0.00 14.19
Dividend per Basic Share Div per Share (Qtr) 0.00 0.71
FCF Dividend Payout Ratio % FCF Div Payout % (Qtr) 0.00 18.58
Interest Coverage Int. cover (Qtr) 0.00 4.43
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex 1y % (Qtr) 79.44 13.87
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) -0.30 33.75
Dividend Growth (1y) % Dividend Growth (1y) % 0.00 0.00
EBIAT Growth (1y) % EBIAT 1y % (Qtr) 25.04 -272.99
EBITDA Growth (1y) % EBITDA 1y % (Qtr) 34.71 588.45
EBIT Growth (1y) % EBIT 1y % (Qtr) 25.27 29.27
EBT Growth (1y) % EBT 1y % (Qtr) 25.49 -92.23
EPS Growth (1y) % EPS 1y % (Qtr) 23.86 -121.86
FCF Growth (1y) % FCF 1y % (Qtr) 1.56 71.80
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr) -18.19 2.50
Liquidity Ratios Value Ind Avg Percentile
Asset Utilization Ratio Asset Util Ratio (Qtr) 1.01 1.24
Cash Payout Ratio Cash Payout (Qtr) 0.00 0.04
Cash Ratio Cash Ratio (Qtr) 0.93 0.74
Current Ratio Curr Ratio (Qtr) 3.81 3.56
Debt to Equity Ratio Debt/Equity (Qtr) 0.30 25.92
Interest Cover Ratio Int Coverage (Qtr) 0.00 4.43
Times Interest Earned Times Interest Earned (Qtr) 0.00 4.43
Profitability Value Ind Avg Percentile
EBITDA Margin % EBITDA Margin % (Qtr) -14.80 -42.64
EBIT Margin % EBIT Margin % (Qtr) -24.70 -131.12
EBT Margin % EBT Margin % (Qtr) -24.70 -64.70
Gross Margin % Gross Margin % (Qtr) 25.00 30.93
Net Profit Margin % Net Margin % (Qtr) -24.80 -65.71