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Green Thumb Industries Inc.'s (CSE:GTII): Green Thumb Industries Inc. manufactures, distributes, markets, and sells various cannabis consumer packaged goods for medical and adult use in the United States. The CA$2.0b market-cap company announced a latest loss of -US$59.1m on 31 December 2019 for its most recent financial year result. The most pressing concern for investors is GTII’s path to profitability – when will it breakeven? Below I will provide a high-level summary of the industry analysts’ expectations for GTII.
According to the 17 industry analysts covering GTII, the consensus is breakeven is near. They expect the company to post a final loss in 2020, before turning a profit of US$47m in 2021. Therefore, GTII is expected to breakeven roughly a few months from now. In order to meet this breakeven date, I calculated the rate at which GTII must grow year-on-year. It turns out an average annual growth rate of 69% is expected, which is extremely buoyant. If this rate turns out to be too aggressive, GTII may become profitable much later than analysts predict.
Underlying developments driving GTII’s growth isn’t the focus of this broad overview, however, keep in mind that by and large a pharma company has lumpy cash flows which are contingent on the drug and stage of product development the business is in. This means that a high growth rate is not unusual, especially if the company is currently in an investment period.
Before I wrap up, there’s one aspect worth mentioning. GTII has managed its capital judiciously, with debt making up 11% of equity. This means that GTII has predominantly funded its operations from equity capital,and its low debt obligation reduces the risk around investing in the loss-making company.
This article is not intended to be a comprehensive analysis on GTII, so if you are interested in understanding the company at a deeper level, take a look at GTII’s company page on Simply Wall St. I’ve also put together a list of key aspects you should look at:
Valuation: What is GTII worth today? Has the future growth potential already been factored into the price? The intrinsic value infographic in our free research report helps visualize whether GTII is currently mispriced by the market.
Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Green Thumb Industries’s board and the CEO’s back ground.
Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.
If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned.
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