Avant Brands AVTBF stock is a company I have had my eye on for some time. Formerly GTEC Holdings GGTTF stock, Avant Brands AVTBF stock did a rebrand that was more in line with its current direction. The focus now is premium branding and Avant Brands is no longer a vertically integrated cannabis company. The premium branding is playing out nicely; Avant Brands is constantly selling out of its products and cannot keep up with demand.
The demand aspect is what I really wanted to focus on. Despite there being strong demand, Avant Brands is a fraction of its potential as they await the last portion of licensing that will afford significant expansion potential. Future potential is for some 12,000 KG of product. Given the pricing point, Avant Brands commands, some $7.50 CAD per gram, this will push revenues to $90M. And, since Avant Brands is sharing production facilities with licensing agreements, this translates into reduced costs for some of its operations. Reduced costs usually translate into higher profit potential.
But, I think it might be a bit of time, perhaps up to 24 months, before sizable amounts of capacity are actually used. In fact, with my projections, I only used about $60M in total revenues. This would mean that if Avant Brands were to push their products to higher levels, my projections would prove to be low. Not a bad problem to have.
Avant Brands AVTBF Stock Comparisons
I am really projecting forward with my look at Avant Brands and what I really think could happen to AVTBF stock. Given that, understanding where Avant Brands is right now will help in determining the future of AVTBF stock.
I have the Complete list of Top 100 Cannabis Companies where I compare all of the various companies to each other. This helps in determining where any one company stacks up versus all of the others.
Here are the numbers for Avant Brands:
- #20 Revenue Growth Rate: 40.0%
- #71 Revenue Per Share: $0.011
- #42 Gross Margins: 39.1%
- #30 Operating Efficiencies: 52.4%
- #36 EBITDA/Revenue: -0.01%
- #17 Cash/Debt Ratio: 100%
This is a solid foundation for metrics and, moving forward as Avant Brands continues to increase revenues other metrics such as gross margins will continually increase.
Avant Brands Financial Data
I was able to sift through the latest financial statement transcript which is always very informative for investors. Future Projections of 12,000 KG of cannabis production could mean as much as $90M CAD in revenue. That is sizable. But, Avant Brands is a long way away from hitting full throttle. Right now, Avant Brands is bringing in about $5.21 USD (including excise taxes) per gram. This means that $60M is likely with full capacity. But, I backed that down and went with about 80% of full capacity at $50M revenue projection.
Revenue
For now, revenues are climbing and Avant Brands states they should see a sizable increase similar to the last quarter increase:
If Avant Brands were to get to $50M in revenue then continued increases are in order. I will be looking for this to occur. But, Avant has stated that the 3LP licensing has been delayed and this represents some 6,000 KG of capacity. My thinking is the licensing should be finalized by the end of this year. Then, production could begin immediately with a likelihood of capacity being reached within 2022.
Gross margins
Margins are a bright spot but, admittedly, Avant management stated that there is room for improvement with utilizing more capacity in facilities. Look for this to improve:
Another factor that related to gross margins diminishing is the increasing in costs related to adult-use packaging. With higher product numbers pushing through the system, this will move lower and improve.
Operating Efficiencies
Operating efficiencies are a bright spot for a cannabis company looking to increase revenues significantly. For now, Avant Brands is competitive and likely to get to some of the better levels we see with companies hitting premium numbers:
Clearly, management at Avant Brands is demonstrating prudence in their work with cost metrics and as revenues continue to expand this will trend lower and lower (you want the lowest possible number you can get).
EBTIDA Profits & Net Earnings
EBITDA was flat for the quarter. But, this shows that Avant Brands is sitting on a solid foundation. As the premium branded boutique cannabis company continues to grow and expand above its current levels this will go well to get to net profitability.
Avant Brands AVTBF Stock Chart
AVTBF was formerly GGTTF stock. No more after the rebrand so there is not a lot of historical info on just this stock alone.
AVTBF Stock Chart
Here is the latest AVTBF stock movement:
Unfortunately, we don’t have a lot of information on AVTBF because of the rebrand and newness of the stock. But, here is a look at what is going on in the broader marijuana stocks sector.
MSOS ETF Chart
MSOS continues to move lower. It will do so for some time, it looks:
As you can see, cannabis companies are falling out of favor with the broader market. To me, that is too bad but, it is more of a buying opportunity than anything.
Because of this, I am starting to cover MSOS so that we can all get a better feel as to what is going on with the companies.
Avant Brands AVTBF Stock Projection
Avant Brands has current production capacity of 12,000 KG (after 3LP). They are selling out of product and bringing in some $7.21 CAD average (excise tax inclusive). If we deduct for excise tax and use a reasonable conversion of about 80% total capacity (despite them selling out), this would likely bring in about $50M USD revenue.
Here is a breakdown of what could happen:
- $50M Revenue
- 40% Cost of Goods
- 30% Operating Costs
- 10% Continuing Costs
I believe Avant Brands can get to these metrics with the prudence that the cannabis company has shown in containing costs and growing revenue.
From that, here is a breakdown of where that puts AVTBF:
- Shares Outstanding: 240M (Pro Forma as Converted)
- $6.5M Net Earnings
- $0.027 EPS
- 100x Future Earnings: $2.70
- $0.45 AVTBF (Current)
Because of all of the above-mentioned momentum, I believe that AVTBF is a company that will see its stock price move upwards over the course of the next couple of years to $2.70 and beyond.
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