Yahoo Finance urban-gro, Inc. (NASDAQ:UGRO) Just Reported And Analysts Have Been Cutting Their Estimates
As you might know, urban-gro, Inc. (NASDAQ:UGRO) last week released its latest yearly, and things did not turn out so great for shareholders. Earnings fell badly short of analyst estimates, with US$72m revenue falling -15% short, and statutory losses of US$1.66 per share being -17% greater than forecast. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. 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 urban-gro
Taking into account the latest results, the consensus forecast from urban-gro's four analysts is for revenues of US$81.6m in 2024. This reflects a notable 14% improvement in revenue compared to the last 12 months. The loss per share is expected to greatly reduce in the near future, narrowing 72% to US$0.44. Before this earnings announcement, the analysts had been modelling revenues of US$112.5m and losses of US$0.41 per share in 2024. So there's been quite a change-up of views after the recent consensus updates, withthe analysts making a serious cut to their revenue outlook while also expecting losses per share to increase.
The consensus price target fell 17% to US$4.74, with the analysts clearly concerned about the company following the weaker revenue and earnings outlook. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. There are some variant perceptions on urban-gro, with the most bullish analyst valuing it at US$8.00 and the most bearish at US$3.00 per share. As you can see the range of estimates is wide, with the lowest valuation coming in at less than half the most bullish estimate, suggesting there are some strongly diverging views on how analysts think this business will perform. With this in mind, we wouldn't rely too heavily the consensus price target, as it is just an average and analysts clearly have some deeply divergent views on the business.
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 urban-gro's revenue growth is expected to slow, with the forecast 14% annualised growth rate until the end of 2024 being well below the historical 29% p.a. growth over the last five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 3.4% annually. Even after the forecast slowdown in growth, it seems obvious that urban-gro is also expected to grow faster than 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. They also downgraded urban-gro's revenue estimates, but industry data suggests that it is expected to grow faster 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 urban-gro's future valuation.
With that in mind, we wouldn't be too quick to come to a conclusion on urban-gro. Long-term earnings power is much more important than next year's profits. We have estimates - from multiple urban-gro analysts - going out to 2026, and you can see them free on our platform here.
You should always think about risks though. Case in point, we've spotted 5 warning signs for urban-gro you should be aware of, and 2 of them shouldn't be ignored.
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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.
