Green Thumb Industries GTBIF stock Forecast & Analysis

Green Thumb Industries GTBIF Stock reported its earnings earlier and, revenues for the quarter were slightly soft.  This is consistent with some of my thinking I have had regarding all cannabis stocks that we would see softer revenues.  There were surges during COVID lockdowns, and now that bars are opening up, cannabis sales are declining somewhat. I wanted to get the GBTIF stock forecast presented as Green Thumb Industries is such a key barometer for all cannabis stocks.

Green Thumb Industries should absolutely be a consideration for your cannabis investments as they are one of the best cannabis stocks to buy and I have the GTBIF stock forecast.  From this, Green Thumb Industries GTBIF stock has the ability to propel the entire industry.  The initial news saw GTBIF stock move upwards.  However, with the conflict in Eastern Europe, those moves were quickly wiped out.

To me, Green Thumb Industries is an important stock due to its size and market reach.  They are in 15 different states as of this writing; that will continually climb.  Because of its position in the cannabis industry, Green Thumb Industries, should GTBIF stock respond to the earnings and move higher, will very likely drive all other cannabis investments.

Green Thumb Industries will do well with the eventual cannabis federal legalization that appears to have more momentum than many are holding on to.  What I like about this is that so many are so downtrodden over where cannabis investments are that when cannabis federal legalization does occur, there will be a massive rush back in pushing stocks upward, such as GTBIF stock.

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Green Thumb Financial Data

Here is a breakdown of Green Thumb Industries Q4 financial data from Green Thumb Industries.

Green Thumb Industries Gross Profits

First quarter, 2022, for green Thumb Industries saw a small decline in revenue; almost not worth bringing up.  In general, my expectation is that there will be continued organic growth for cannabis stocks.  And, Green Thumb Industries, being a bellwether for cannabis investments, will grow.  There is a good deal of opportunity for increased gross margins and gross profits as Green Thumb continues to expand in states where they already have capacity.  Utilization of existing capacity, increasing what is going through existing grow & processing facilities, and then eventually dispensaries will enable for improved profits.

In the meantime, gross margins popped up slightly to 55% for the year according to the press release.  Despite that, gross margins only came in at around 51.5% for Q4.  But, Green Thumb Industries will see organic growth in its dispensaries.

Think that through: the rent is already paid in these dispensaries and grow facilities.  But, if you push through 25% more product, this will have outsized marginal profits.  These additional profits will drive margins upwards.  That is what I am focusing on for now.

Green Thumb Industries Operating Profits

If a company achieves the 30% – 35% level in operational costs relative to revenues, you are performing in the top-tier.  Given that Green Thumb Industries has such a low number – Operating efficiencies are a ratio; you are always looking for the lowest possible operating costs relative to revenue – there is a lot of room to add to sales marketing costs if it could drive revenues higher.  At 31%, this puts Green Thumb Industries at the top of the heap with such a low number; albeit not #1.

This metric shows how well-positioned Green Thumb Industries is.  This, especially considering it is the second-largest cannabis company.

Ultimately, however, Green Thumb Industries, along with all of the other cannabis companies, are going to have to push their operating efficiencies far further than where they are.  Most of the S&P 500 companies, the broader stock market, print approximately 17.5% operating efficiencies.  Basically, Green Thumb Industries will need to double revenue from where they are to achieve this – Operating efficiencies are a ratio of cost over revenue, and you are looking for the lowest possible number.

A marketing company would only need to do so much and replicate these efforts in order to promote Green Thumb Industries.  Or, the CEO pay is spread out over more and more revenue.  This is how these metrics improve as revenues increase.

Green Thumb Industries EBTIDA & Net Profits

There was a slight drawdown in EBITDA for the most recent quarter coming in at 29.1% EBITDA/Revenue.  This, however, is still far above the S&P 500 broader average of approximately 22.5%.  And, at 29.1%, this is still above the norm for most cannabis companies.  Given that, if you look at GTBIF stock as a longterm growth stock opportunity that is unrealized by the market, as revenues continue to grow, perhaps doubling over the next 3.5 years, this enables operating efficiencies to push toward 17.5%.

And, if gross margins were also to improve upward to approximately 60%, there is even more room for upside potential for GTBIF stock.  This is the growth stock aspect of what a cannabis stock investor would want to key in on.

Look for continued increases in organic growth at dispensaries and, from that, the marginal profits will drive EBTIDA higher.  Then, this trickles down to net earnings, or net profits.  This, to me is where the real opportunity lay with a cannabis investment of GTBIF stock.  Should Green Thumb Industries start to increase gross margins, which are not bad, by any stretch, and Green Thumb Industries starts to push upwards to the mid 60% area, that is pure profit potential.  GTBIF stock is a well-positioned cannabis investment.

Green Thumb Industries Cash On Hand

Green Thumb Industries has zero concern in the cash-on-hand and cash-to-debt ratio.  As the company is cash-flow positive, they will be bringing in more and more profits.  Look for Green Thumb Industries to increase both CapEx & M&A activity with their continually building war chest of cash on hand.

Green Thumb Industries Total Equity

Looking towards total equity, assets less liabilities, this is where you look to see how well management is increasing shareholder value, although not the only resource.  As assets accumulate, they are the engine of producing revenue.  And, as long as there is enough revenue scaled up to be profitable, this drives total equity.  This is one place that shows how shareholder value is created.

As mentioned, continued profits will enable Green Thumb Industries to embark on many projects of asset growth including acquisitions and CapEx with new dispensaries.

Green Thumb Industries Stock Forecast

Green Thumb Industries GTBIF Stock DCF

I have already done the DCF and my target for GTBIF stock forecast is $99.08.  But, while calculating the DCF, I also backed off from the EV/EBTIDA levels that are used in calculating the future stock forecast.  I used 40x.  This could easily have been pushed to 50x, if not higher.  And, if cannabis investments start to get hot, I will likely push this higher showing the potential of GTBIF stock.

But, investing is a popularity contest.  Cannabis investments are not necessarily popular at this moment despite the intrinsic value of these stocks.  But, the market will not ignore profits forever.  As Green Thumb Industries continues to print its revenues and profits over the course of the coming quarters, savvy investors will wake up to the realities of cannabis investments.

I may easily update the coming GTBIF stock forecast in the coming quarters.

Is Green Thumb Industries GTBIF Stock A Good Investment?

Green Thumb Industries is a top-tier cannabis company. GTBIF stock will continually perform well.  However, for now, and across the board for all cannabis stocks, there will be significant upside potential as these cannabis stocks begin a long, sustained journey higher and higher.

The big crux of this is the lack of institutional investors involved in investing in cannabis stocks. Many are precluded from investing in cannabis stocks because they are OTC or, simply, cannabis federal legalization has not occurred yet.  Once cannabis federal legalization occurs, this will enable far more players to get involved in cannabis stocks investing.

It is that sustained ability that I am really looking toward for cannabis stocks to move forward.  Having far more individuals involved in the game via Nasdaq up-listing is the ultimate game-changer.  This is when cannabis stocks will really see a big shift in interest and participation.  This will also be when the smallest players start to get involved more regularly as their smallish brokerages would finally allow for them to trade these stocks.

Sustained Upside

I see GTBIF as a sustained move upside potential.  Green Thumb will continue to expand their foundation.  Revenues will continually expand.  From that, profits will continue to increase.  The revenue growth rate will far surpass that of the broader market.  Larger players are going to push for that as they will be chasing that growth rate since they will not be able to achieve these numbers in the broader stock market.

Investing in cannabis stocks is a process.  We all thought that these companies would crush it at first, and cannabis stocks would surge and stay up at these levels.  But, the process is multi-fold.  And, each event within that process has moved cannabis stocks both up and down.

Now, however, these cannabis stocks are at the very bottom.  This is an excellent time for someone getting involved in both GTBIF stock and cannabis stock investing in general. There is only upside from here and the catalysts are just around the corner.

Green Thumb Industries GTBIF Stock Financial Data

Green Thumb Industries GTBIF Stock Financial Statements