Recently changing its name to Unrivaled Brands UNRV Stock from Terra Tech Corp TRTC Stock; they have put together a large footprint with three states: California, Nevada, and Oregon. And, with the Unrivaled acquisition, Unrivaled Brands will now have sales in Arizona and Oklahoma; Unrivaled Brands’s footprint is taking a big step forward. The combined companies are expected to generate about $70M over 2021.
Also, Unrivaled Brands has monetized two separate assets, one being a dispensary and the other real estate. From this, Unrivaled Brands is bringing in $40M in proceeds and carrying two notes receivables. This will continue to add to cash flow. More, Unrivaled Brands entered yet another agreement to bring in an additional dispensary in Sacramento, SilverStreak Solutions. This is a very positive move that brings in a large customer base in Sacramento adding to Unrivaled Brands’s already large customer base in the Bay Area. Although Unrivaled Brands did not state revenues, I could imagine revenues hitting up to $100M – $120M annually.
What I like Best about Unrivaled Brands UNRV
What I like best about all of these is the organic growth potential for Unrivaled Brands. When you sift through all of the potentials you can see there is a lot of opportunities here and that Unrivaled Brands is likely to grow significantly organically over the next few years.
Unrivaled is a top 10 product producer in its market. Now, that quality and drive can be distributed in California, Oregon, and Nevada, where Unrivaled Brands already has holdings. Given this kind of distribution potential and the ability for these top-rated brands to be offered in new markets, you could expect to see increased organic growth driven from this.
Then, you have SilverStreak Solutions where they have some 42K returning monthly consumers. They are a direct-to-consumer dispensary system. Most basket orders in cannabis are average of approximately $65 with a high of about $110. At 42K returning customers, that could be an additional $35M in revenue (Unrivaled BrandsUnrivaled Brands has not stated total revenues for SilverStreak Solutions in the press release). And, what if SilverStreak Solutions were now to start offering its service in the Bay area where Unrivaled Brands is based? This could be a dynamic organic growth story.
Another move would be if optimization of assets were achieved. With the mergers, it is very likely that grow facilities will be consolidated. We already know that management is keen on optimizing these kinds of assets as they just monetized facilities that brought in the $40M. Given that, what facilities will be retained are likely to see economies of scale push asset utilization rates up significantly.
This will serve to improve margin and cost metrics.
UNRV Stock Chart
Here is a look at the most recent UNRV Stock chart:
As I mentioned UNRV stock looks ready to lift off. But, where could the stock move towards?
Unrivaled Brands UNRV Stock Revenue
Revenue will grow significantly over the next few quarters. On a pro forma basis I can see the combined companies achieving $100M this coming year. Most of the acquisitions and mergers will not be solidified for a few more months.
Normally, I would push charts up however, they are entirely obsolete as the new revenues are expected to be approximately $25M – $30M per quarter versus the previous $5M per quarter.
Given this, what I wanted to do was lay out the case for a potential investment in Unrivaled Brands. Usually, I put in the charts for revenue, gross margins, operating efficiencies, and other metrics to show the progress of a respective company. However, in this case, with Unrivaled Brands, immediately and financial data I show is obsolete.
Instead, let’s factor in a few variables to determine what is possible for Unrivaled Brands. So, this is a prospective look at the future of Unrivaled Brands UNRV Stock.
Clearing up UNRV
First, there are some 230M shares outstanding at this time. But, after the two deals conclude, I am not certain of what the new share count will be. That is significant and I will try and accommodate for that. First, let’s bump the share count up 20% to allow for shares being used to bring in the new companies (They were not all-cash deals). Please note: When I get the full share count after the close of the deals and the company reports, I will reallocate for this, but this should give us a decent base-case scenario for what to expect.
Give this, at 275M shares outstanding in the future, revenues should come in about $105M. If Unrivaled Brands has some 40% gross costs on products, returning 60% gross profits and they simultaneously have 40% total operating costs (of revenue), then you can expect an approximate 80% of revenue in costs. EBITDA profits for normalized companies runs usually about 30%. So, these numbers are within reason. At ~10% revenue, continuing costs will eat into the remainder of the profits bringing net income in at 10% of revenue.
With some 275M shares outstanding, this is an EPS of ~$0.035. Given a 75x future earnings multiple, a modest number for a company with a growth rate such as Unrivaled Brands, this would put UNRV stock at ~$2.00 per share.
UNRV Stock Caveats
First, Unrivaled Brands has to achieve these metrics. Every day, I feel certain that management is driven by these metrics as its baseline goal. This, however, does not necessarily mean that Unrivaled Brands will instantly print these numbers. But, over time, I feel confident that a management team dedicated to optimizing investor value will achieve these goals. That being said during that time of achieving these metrics with costs/margins/profits, Unrivaled Brands looks certain to also increase revenues during this time and likely they can print a solid 50% – 100% increase YoY for 2022.
The second caveat is that we do not necessarily know the future share count at this point. But, I feel as if I have come in at a reasonable number to allow for this. Given that, I think I’m likely within a single-digit +/- margin of error, and I feel comfortable with the projection.
Third, the economy is going to be transitioning. Future interest rates are uncertain and this brings in future consideration for projections.
I feel this is a fairly solid base-case for UNRV stock. I will continually update what I am thinking with Unrivaled Brands as we get more and more information from them.
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