Investors in urban-gro, Inc. (NASDAQ:UGRO) had a good week, as its shares rose 5.5% to close at US$1.93 following the release of its first-quarter results. Revenues were a bright spot, with US$16m in revenue arriving 2.7% ahead of expectations, although statutory earnings didn't fare nearly so well, recording a loss of US$0.18, some 5.9% below consensus predictions. 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. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on urban-gro after the latest results.

After the latest results, the four analysts covering urban-gro are now predicting revenues of US$82.0m in 2024. If met, this would reflect a meaningful 17% improvement in revenue compared to the last 12 months. Losses are predicted to fall substantially, shrinking 64% to US$0.46. Before this latest report, the consensus had been expecting revenues of US$81.8m and US$0.43 per share in losses. Overall it looks as though the analysts were a bit mixed on the latest consensus updates. Although revenue forecasts held steady, the consensus also made a modest increase to its losses per share forecasts.

The consensus price target held steady at US$4.64, seemingly implying that the higher forecast losses are not expected to have a long term impact on the company's valuation. 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 urban-gro, with the most bullish analyst valuing it at US$8.00 and the most bearish at US$3.00 per share. We would probably assign less value to the analyst forecasts in this situation, because such a wide range of estimates could imply that the future of this business is difficult to value accurately. 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.

Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. The period to the end of 2024 brings more of the same, according to the analysts, with revenue forecast to display 23% growth on an annualised basis. That is in line with its 27% annual growth over the past five years. Compare this with the broader industry, which analyst estimates (in aggregate) suggest will see revenues grow 3.6% annually. So it's pretty clear that urban-gro is forecast to grow substantially faster than its industry.

The Bottom Line

The most important thing to note is the forecast of increased losses next year, suggesting all may not be well at urban-gro. Fortunately, they also reconfirmed their revenue numbers, suggesting that it's tracking in line with expectations. Additionally, our data suggests that revenue is expected to grow faster than the wider industry. The consensus price target held steady at US$4.64, with the latest estimates not enough to have an impact on their price targets.

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 forecasts for urban-gro going out to 2026, and you can see them free on our platform here.

Don't forget that there may still be risks. For instance, we've identified 5 warning signs for urban-gro (1 can't be ignored) you should be aware of.

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