It's been a good week for GrowGeneration Corp. (NASDAQ:GRWG) shareholders, because the company has just released its latest quarterly results, and the shares gained 8.6% to US$2.92. It was a pretty bad result overall; while revenues were in line with expectations at US$48m, statutory losses exploded to US$0.14 per share. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.

See our latest analysis for GrowGeneration

Taking into account the latest results, the five analysts covering GrowGeneration provided consensus estimates of US$209.6m revenue in 2024, which would reflect a perceptible 3.4% decline over the past 12 months. Losses are predicted to fall substantially, shrinking 56% to US$0.35. Yet prior to the latest earnings, the analysts had been forecasting revenues of US$211.8m and losses of US$0.34 per share in 2024. So it's pretty clear consensus is mixed on GrowGeneration after the new consensus numbers; while the analysts held their revenue numbers steady, they also administered a modest increase to per-share loss expectations.

The consensus price target fell 14% to US$4.37per share, with the analysts clearly concerned by ballooning losses. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. There are some variant perceptions on GrowGeneration, with the most bullish analyst valuing it at US$8.00 and the most bearish at US$2.25 per share. With such a wide range in price targets, analysts are almost certainly betting on widely divergent outcomes in the underlying business. As a result it might not be a great idea to make decisions based on the consensus price target, which is after all just an average of this wide range of estimates.

Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. We would highlight that revenue is expected to reverse, with a forecast 4.5% annualised decline to the end of 2024. That is a notable change from historical growth of 21% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 4.9% annually for the foreseeable future. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - GrowGeneration is expected to lag the wider industry.

The Bottom Line

The most important thing to take away is that the analysts increased their loss per share estimates for next year. On the plus side, there were no major changes to revenue estimates; although forecasts imply they will perform worse than the wider industry. The consensus price target fell measurably, with the analysts seemingly not reassured by the latest results, leading to a lower estimate of GrowGeneration's future valuation.

With that in mind, we wouldn't be too quick to come to a conclusion on GrowGeneration. Long-term earnings power is much more important than next year's profits. At Simply Wall St, we have a full range of analyst estimates for GrowGeneration going out to 2025, and you can see them free on our platform here..

And what about risks? Every company has them, and we've spotted 2 warning signs for GrowGeneration you should know about.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.