Sundial, SNDL Stock, could be one of the premiere cannabis companies for Canada. They are amply funded with cash on hand. They are deploying this cash in various methods to build a dominant company. But, they have yet to gain any real traction with revenue growth. Nonetheless, this SNDL a cannabis stock that could power forward as it is Nasdaq-listed. This means the masses are able to invest in SNDL stock; Sundial SNDL stock is very popular. However, popularity aside, scaling up revenue is a must considering the increasing total equity and sufficient cash on hand. Given all of this I want to put together the SNDL stock forecast & analysis is a priority.
For the future growth of revenue, I found several analyst numbers projecting roughly $525M revenue for 2022 for Sundial. This is enormous. However, it is also a head-scratcher as they just printed $14M the first quarter. And, while many adherents are steadfastly pushing for this stock to continue further upward, I am quickly losing patience with a company like this. They are in the top-tier with number of dispensaries in Canada and only have $14M in revenue to show for it. Yes, Sundial will scale up. When?
Sundial SNDL Stock & Cannabis Federal Legalization
At the same time, I believe all cannabis stocks are going to move upward. Cannabis federal legalization is gaining traction. All cannabis stocks are significantly undervalued on some level. And, if there is a big move upward in cannabis stocks, SNDL stock will move higher. However, after the party is over, what happens next? All cannabis stocks will settle right back down. But, maybe they do not get to a level where they are now; massively undervalued based on future potential and cash position.
Sundial will need to start executing and hitting its mark. This is what will be needed for SNDL stock to maintain a lofty price and get to the target price.
Even that is not necessarily a done deal. Cannabis stocks need to migrate and up-list to Nasdaq. Then, these same stocks need to start merging with significant M&A activity and gain a critical mass where there are more focused investors on fewer stocks; I am analyzing over 100 pure-play cannabis stocks on this site. Getting to critical mass would be the final step in all of this.
Those of us buying in now will look back on these early days. Hopefully, Sundial will be able to move through all of this and get to that necessary level. I am holding the $525M revenue for this year and an additional $725M revenue for next year. But, Sundial needs to execute.
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Sundial Financial Data
Here is the latest on Sundial SNDL stock from their financial statements including the SNDL stock forecast & analysis.
Sundial Gross Profits
There are expectations for scaling up well beyond where Sundial currently is. Sundial is in the top in Canada with total number of dispensaries. Yet, they only printed $14M in revenue. For now, this falls far short of getting sufficient economies of scale to build up the business in such a way that this all makes for profitability.
If Sundial were to start printing the numbers that they need to print, margins will begin to improve. Gross margins, at this level, are barely above 0%. But, for Sundial to achieve $525M, they will be printing approximately $175M per quarter over the next three quarters. Scaling up to that level will mean getting improved margins.
Once Sundial achieves these levels, gross profits will be more competitive.
Sundial Operating Profits
At this point, Sundial is printing about $10M – $15M in operating costs. At that level, and if this was sustained, if Sundial printed a mere $50M in revenue, they would be one of the better performing cannabis stocks relative to others. This tells me that Sundial is keeping this metric at a reasonable level.
But, operating costs tend to also go upward as it entails Sales, General, & Administrative. You need to crack a few eggs to make an omelet. I would expect operating costs to drift upward along with revenues. But, this is an easy starting point to being competitive for Sundial and, this is one point of the financial statements that are well positioned.
Sundial EBITDA & Net Profits
In this portion of the financial statement, Sundial is a long ways off. Sundial needs to gain scale in revenue, improve gross margins, and maintain its current cost levels with operating costs. This will get Sundial to profitability.
Again, for now, there is no real pathway. But, with the improved scale, this will get Sundial to better metrics with profitability. I will continually update my SNDL stock forecast & analysis as more information comes in.
Sundial Cash On Hand
At $400M in cash on hand, Sundial is one of the best funded cannabis stocks there is. Cash is like oxygen for any business that is under water. While Sundial has plenty of cash, they are very far away from profitability. But, scaling up the business will mean getting closer to profitability. If management is able to scale up quickly enough and gain profitability to some level, lowering its burn rate, this will empower Sundial further to be able to use its cash to build further beyond Canada.
Sundial Total Equity
One of the top-tier indicators I look toward for these growth penny stocks is where they are with regard to total equity. Increasing equity is going to push revenue increasingly higher. After cash, Sundial has approximately $1B in total equity. This needs to be leveraged to get to the point where there is some increases in revenue.
Look for continued growth with the dispensaries to build up equity more and more. And, look for Sundial to deploy its cash to build up the business more and more in the future.
Sundial Growers SNDL Stock Forecast
Sundial SNDL DCF
| Assumptions | ||
|---|---|---|
| Tax Rate | 25% | |
| Discount Rate | 8.000% | |
| Perpetural Growth Rate | 25.0% | |
| EV/EBITDA Mulltiple | 35.0x | |
| Transaction Date | June 1, 2022 | |
| Fiscal Year End | 12/31/21 | |
| Current Price | $0.370 | |
| Market Capitalization | 250,000,000 | |
| Debt | $12,000,000 | |
| Cash | $1,300,000 |
| Market Value | ||
|---|---|---|
| Market Cap | $592,500,000 | |
| Plus: Debt | $12,000,000 | |
| Less: Cash | $1,300,000 | |
| Enterprise Value | $603,200,000 | |
| Equity Value/Share | $2.3700 |
| Unlevered FCF | 2022 | 2023 | 2024 | 2025 | 2026 | ||
|---|---|---|---|---|---|---|---|
| Revenue | June 1, 2022 | Dec 31, 2022 | Dec 31, 2023 | Dec 31, 2024 | Dec 31, 2025 | Dec 31, 2026 | Dec 31, 2026 |
| EBIT | 1 | 2 | 3 | 4 | 5 | ||
| Tax | 0.58 | 1.00 | 1.00 | 1.00 | 1.00 | ||
| Depreciation & Amortization | $52,500,000 | $108,750,000 | $200,000 | $312,500,000 | $412,500,000 | ||
| Change in Net Working Capital | $13,125,000 | $27,187,500 | $50,000 | $78,125,000 | $103,125,000 | ||
| Capex | $18,375,000 | $25,375,000 | $35,000 | $43,750,000 | $52,500,000 | ||
| Unlevered FCF | $52,500,000 | $72,500,000 | $100,000 | $125,000,000 | $150,000,000 | ||
| -$52,500,000 | -$72,500,000 | -$100,000 | -$125,000,000 | -$150,000,000 | |||
| 1 | $57,750,000 | $106,937,500 | $185,000 | $278,125,000 | $361,875,000 | ||
| -$603,200,000 | $6,807,077,206 | ||||||
| - 0 | $33,687,500 | $106,937,500 | $185,000 | $278,125,000 | $361,875,000 | $6,807,077,206 | |
| -$603,199,999 | $33,687,500 | $106,937,500 | $185,000 | $278,125,000 | $361,875,000 | $6,807,077,206 | |
| Unlevered FCF | 2022 | 2023 | 2024 | 2025 | 2026 |
| Rate of Return | ||
|---|---|---|
| Target Price Upside | 805% | |
| Internal Rate of Return (IRR) | 79% | |
| Market Value vs Intrinsic Value | ||
| Market Value | $2.37 | |
| Upside | $19.09 | |
| Intrinsic Value | $21.46 |
I am sticking to the $525M & $725M revenue run that a few analysts have provided for guidance. This is the starting point of where my Sundial SNDL stock forecast & analysis begins. The increasing revenue will get scale to push margins to better levels. For now, I kept margins at lower levels because I still need to see the $525M actually occur. Sundial just printed $14M in revenue. What is the pathway to getting to $525M?
I gradually added in incrementally-increasing margins to get to where this stock would be able to produce profitable metrics.
There is one thing to note: Sundial is a very popular stock. Because of this, SNDL will move and be traded with high volumes. This makes SNDL a premiere stock; a cannabis stock to watch. But, I still need to see the numbers to say that after the big surge upward we will then be able to see a continued move higher in SNDL stock.
Sundial Growers SNDL Stock Forecast for Financial Charts
The recent reverse stock split did nothing to help SNDL stock. This was a 10:1 reverse split and it should have kept SNDL stock at a similar level. SNDL stock plummeted. I have had many emails asking if this is an opportunity to buy. While I believe all cannabis stocks are significantly undervalued with tremendous upside potential, they need to execute better. The report card is the chart above.
I like the long term prospects for Sundial. But, I also think they are falling behind and that there are other cannabis stocks that will outperform SNDL stock. I think that is a fundamentally fair assessment of where Sundial is right now.
I am certainly open to pushing my own evaluation upward for SNDL. But, I need to see the beginning of the execution of this company’s plan showing up in financial statements.
8/19/23 Weekend SNDL update: As of Fri, 8/18/23 I consider SNDL a good short term short being that the target below is at 1.43 and the 9/1/23 expiry 1.50 strike puts posted a .03 last trade. That’s a 2X trade if SNDL hits the 1.43 target by 9/1/23. Not bad. SNDL closed at 1.81 during regular hours and 1.77 at the close of AH trading. https://bigcharts.marketwatch.com/advchart/frames/frames.asp?show=&insttype=&symb=sndl&x=36&y=15&time=18&startdate=1%2F4%2F1999&enddate=8%2F6%2F2022&freq=7&compidx=aaaaa%3A0&comptemptext=&comp=none&ma=0&maval=9&uf=0&lf=1024&lf2=2&lf3=0&type=2&style=320&size=4&timeFrameToggle=false&compareToToggle=false&indicatorsToggle=false&chartStyleToggle=false&state=11