Green Thumb Industries GTBIF Stock – Undervalued Marijuana Stock

Green Thumb Industries GTBIF Stock is a significantly undervalued marijuana stock and I’m going to show you why this stock should be double its current price… and then go higher from there.  But, when you compare how the S&P 500 values stocks and you apply the very same measuring stick to marijuana stocks, Mr. Market is significantly undervaluing marijuana stocks.  Green Thumb Industries would be an undervalued marijuana stock – I have yet to add them to the Best Marijuana Stocks To Buy Now but, it’s a possibility.  Green Thumb Industries is also one of the most competitive and profitable cannabis stocks on the Complete List of Top 100 Cannabis Companies.

First, looking backwards, I am applying the latest numbers to what GTBIF stock price should have been given net earnings.  But, these net earnings are only what was printed as net earnings.  Green Thumb Industries also pushed forward with CapEx which dipped into net earnings.  So, my look backwards is muted from actual potential.

Then, I am looking forward into the next four quarters and applying the same patterns to GTBIF stock from the past four quarters to the next four quarters.  After this, you will be able to see how GTBIF stock is undervalued.

Then, there are even more acquisitions.  This means that for the most part, what I am projecting is probably low.

Green Thumb Industries GTBIF Stock Comparisons

From a comparison perspective, Green Thumb Industries GTBIF stock ranks very high on the Complete List of Top 100 Cannabis Companies.  And, what metrics they lag in I can expect to increase over the next few quarters as revenues expand and they process more products.

In the meantime, here is how Green Thumb Industries stacks up:

  • #37 Revenue Growth Rate: 14.2%
  • #2 Revenue Per Share: $1.14
  • #25 Gross Margins: 55.4%
  • #14 Operating Efficiencies: 32.5%
  • #10 EBITDA/Revenue: 29.4%
  • #66 Cash/Debt Ratio: 31.6%

For a company that is on a revenue run rate of $1B and metrics as they are, coming in at the top 10 for EBITDA/Revenue percentage on the list is very respectable.  There are a few metrics where Green Thumb Industries performed very well.  This is a respectable position for the company.

Green Thumb Industries Financial Data

Green Thumb Industries has been printing solid results quarter after quarter.  Their revenues are continuously increasing and its metrics are solidly inside the top ranks.  Most of the data can be found on the company’s website for investors.

Revenue

Continuously, revenues move higher and higher in a steady trajectory upwards:

Green Thumb Industries Revenue
Gross Margins: For Green Thumb Industries Complete Financial Data Visit GTBIF Stock Page

Green Thumb Industries will continue to print increasing revenues as they have been expanding and acquiring. There are a couple of deals in the works right now and this will make it difficult to project future revenues.  Typically, cannabis companies let investors know expectations for the upcoming year regarding revenue and profitability metrics.  But, Green Thumb has done a few deals which have pushed projections out. Also, I am looking forward into the remaining two quarters of this year and then the first two quarters of next year.

Gross margins

For now, gross margins are a metric that is still on the softer side.  But, I see this more as an opportunity than as a disparaging position:

Green Thumb Industries Gross Margins
Gross Margins: For Green Thumb Industries Complete Financial Data Visit GTBIF Stock Page

Some of the very best companies produce gross margin numbers between 60% – 65%.  Green Thumb will very likely be there. The reason is simple: As more product is pushed through the systems, such as production at processing centers and sales at dispensaries, the fixed costs of rent and most of the variable costs such as labor and electricity are already being covered by what is being sold now. Push more product through the system and all of a sudden you have the makings of higher gross margins.

This means that forward projections will have to also incorporate into future stock price projections.

Operating Efficiencies

Current operating efficiencies are a bright spot for Green Thumb Industries:

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You want the very lowest number here.  The very best cannabis companies I see print between 30% – 35%.  Green Thumb is right there and likely to at some point push lower into the 20s.  This shows how much management is dedicated to containing costs.

EBTIDA Profits & Net Earnings

Over the past few quarters, EBTIDA profitability has been consistently coming in and increasing for Green Thumb Industries:

Green Thumb Industries EBITDA Profits
EBITDA Profits: For Green Thumb Industries Complete Financial Data Visit GTBIF Stock Page

Green Thumb Industries has been EBITDA profitable for some 8 quarters.  At the same time, the cannabis company is expanding and acquiring other companies.  Then, with even more scale and increasing gross margins, marginal profits will continually trickle downward to the bottom line… and then to investors.  This will manifest itself in higher share prices for GTBIF Stock.

Net Earnings

Over the past four quarters, Green Thumb Industries has printed positive net earnings:

Green Thumb Industries Net Earnings
Net Earnings: For Green Thumb Industries Complete Financial Data Visit GTBIF Stock Page

Below, I will use the above data to show how the stock is misaligned with the broader market.

Earnings Per Share

Just as Green Thumb Industries GTBIF Stock has seen continued EBTIDA profits, they also have been consistently net earnings profitable.

Green Thumb Industries Earnings Per Share
Earnings Per Share: For Green Thumb Industries Complete Financial Data Visit GTBIF Stock Page

I don’t really print up the EPS data chart too often.  However, something like this is going to start becoming more common here.  Cannabis companies are gaining on profitability.  Some marijuana stocks actually are profitable.

It is because of this profitability that we can see how Green Thumb Industries should be priced higher if the market were applying the same measuring stick to cannabis stocks as the market does for the rest of the broader market.

To me, that is an opportunity.  There are many undervalued marijuana stocks.  Green Thumb Industries is one of them.

Green Thumb Industries GTBIF Stock Chart

Movements in undervalued marijuana stocks have been all down hill lately.  Valuations for cannabis companies are completely misaligned with the broader market.  This is an opportunity for a patient investor.

GTBIF Stock Chart

Here is a look at GTBIF Stock.  The latest financial data did nothing for momentum for marijuana stocks.

Green Thumb Industries GTBIF Stock Undervalued Marijuana Stock
Green Thumb Industries GTBIF Stock Undervalued Marijuana Stock

Green Thumb Industries has largely been range-bound over the past five months, or so.  Cannabis companies have fallen out of favor with investors.  This is presenting a significant opportunity for an astute investor.

But, if you look at the metrics of the broader S&P 500 market, you can see that there is a misalignment in valuations.  This is creating undervalued marijuana stocks.

MSOS ETF Chart

MSOS ETF has been selling off; these are significantly undervalued marijuana stocks:

MSOS Advisor Shares US Pure Cannabis ETF
MSOS Advisor Shares US Pure Cannabis ETF

MSOS ETF has gotten a bit of love the past couple of hours.  But, this is a small respite from the continuous eroding in value of the overall marijuana stock outlook.  I should think there will be some kind of turn-around eventually.  For now, buying on these dips will reward a patient investor.

Green Thumb Industries GTBIF Stock Projection

When you look at the metrics above, given the profits that GTBIF has already earned, GTBIF should have been trading at $33.50 last year:

  • Shares Outstanding: 193M
  • $64.9M Net Earnings
  • $0.3363 EPS
  • 100x Future Earnings: $33.63
  • $30.50 GTBIF

This is the revenue run-rate and earnings potential of Green Thumb Industries from last year.  This cannabis company just earned this for this year but was not efficiently priced to future earnings.

Is Green Thumb Industries GTBIF Stock A Good Buy?

Is Green Thumb Industries a good investment?  Here is what I am looking at for Green Thumb Industries.  First, they are on a strong revenue run rate for the next four quarters.  Currently, they are increasing revenues at a pace of about 15% per quarter.  And, they are going to increase revenues via acquisitions that are accretive.  I’m looking at them posting about $1B in revenue for the next year; I think that is modest that they will exceed that over the 4 quarters.

Given these metrics:

  • $1B Projected Revenue
  • 55% Gross Margins
  • 30% Operating Costs
  • 10% Continuing Costs
  • $150M Net Earnings

Something important to note is that although revenues increased by about 50% in this scenario, profits doubled.  This happens when you are working with percentages.  The base bills get paid and then marginal profits kick in.  This increases profits at a higher rate.

These metrics are entirely similar to what is being printed by Green Thumb Industries right now and so I feel fairly comfortable with these numbers continuing.  But, those gross margins are what I am really eyeing up as a potential profit increase.

An Undervalued Marijuana Stock

Given a $1B revenue potential with consistent metrics, this is the earnings potential for Green Thumb Industries:

  • Shares Outstanding: 193M
  • $150M Net Earnings
  • $0.7772 EPS
  • 100x Future Earnings: $77.72
  • $30.50 GTBIF

I can see Green thumb being on this trajectory right now.  What is important is the future earnings multiple.  Green Thumb is already in the process of printing the $1B with the above metrics and will likely print these profits.  Given how the S&P 500 is being valued, this would put GTBIF stock at $75.00 – $100.00 per share right now.

Remember, this is a future earnings multiple.  You are paying for the yield right now.  Therefore, you earn the ‘yield’ over the course of the next year.

Given this, GTBIF is significantly undervalued.

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