I looked at Cannara Biotech LOVFF Stock a couple of months ago, and not much has occurred since then. This is both good news and bad news, I would suppose. Nonetheless, there is a lot of momentum in cannabis investing right now, and I wanted to look at the more profitable cannabis companies. I wanted to put together the LOVFF Stock forecast and get ready for potentially big moves. First, Cannara Biotech missed profitability this quarter but, it had more to do with one-off write-offs on product than missing the mark.
Cannara Biotech has the third largest square footage of facility space in Canada giving them the potential to produce considerable amounts of product. This gives them a great deal of upside potential growth. For now, revenues are a fraction of what is possible. And, Cannara Biotech is already profitable so, with additional product moving through these facilities,
I’m looking for continued increases in revenue. And, as these increases in revenues add more and more profits to the bottom line, I can see sizeable increase in LOVFF stock in the coming months.
Who Hates Profits?
Cannara Biotech once again has printed solid net earnings profitability. However, the stock market largely does not pay much attention to Cannara Biotech nor LOVFF stock. This is a cannabis stock to watch as LOVFF stock is undervalued relative to the broader market. And, with the company being profitable, this means the stock will move upward from here.
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Cannara Biotech Financial Data
Here is a breakdown of Cannara Biotech Q3 financial data. For a full breakdown of Cannara Biotech LOVFF stock numbers.
Cannara Biotech Gross Profits
There was a small move downward in gross margins owed to the increase in costs from planting more plants. But, the future is promising for LOVFF stock as the future sales from this will push gross margins upwards (The costs are being carried now for the future revenue).
I really do not think the market is pricing in the future potential of LOVFF stock when you put this together. And, with so many positive things happening in the cannabis industry now, this is even more of a reason to be positive on the industry.
Cannara Biotech Operating Profits
Operating costs are slightly higher relative to previous quarters. Still, these costs, relative to the total revenue, will decline on a percentage basis as revenues increase; it is a mathematical equation. I expect the revenues to hit in 6-9 months and this will have outsized margins compared to earlier margins. This will make operating efficiencies improve.
Mostly, the companies I look at are hitting approximately 30% – 35% for the better performers. Cannara Biotech is close to that number and likely to hit that soon. If gross margins also improve, something I believe is a given considering the future revenues and sales from the new crop, operating efficiencies are going to improve along with EBTIDA and net earnings.
Cannara Biotech EBTIDA & Net Profits
Having to plant new plants, and other smaller write-offs, affected gross margins and net earnings. But, you have to crack a few eggs to make an omelet; building a company is not an event, it is a process. What is planted today will be sold tomorrow. Revenues and profits will come from those future sales. So, in about 6-9 months, the fruits… or, in this case, the buds & flowers, will add to the bottom line. I think this is where the market is asleep with Cannara Biotech.
As for LOVFF stock forecast, I can see how the future earnings and revenues will add in to the bottom line. I think LOVFF stock is about appropriately where it should be considering its current eanrings. But, the future is bigger. So, shouldn’t LOVFF stock be moving higher? I believe so.
Cannara Biotech Cash On Hand
Mostly, Cannara Biotech is profitable despite its size and under-utilization of the facilities. But, Cannara Biotech is going to grow into its future potential. For now, Cannara Biotech is net earnings positive. This will continually add to its coffers. At the same time, Cannara Biotech also has a low amount of debt and the cash/debt ratio is strong.
Cannara Biotech Total Equity
If you are looking to find out if management is dedicated to increasing shareholder value, this is a good place to start. Increasing equity is what is necessary to build the future of revenue. Assets are what is necessary to increase and sustain revenues. The moves upward in equity are promising and if management continues in this broader trend investors will see gains in LOVFF stock.
The future inventory from the new plantings will start to show up in future financial releases. Look for moves higher here as assets are utilized more and more and Cannara Biotech management continues to grow and expand the company. I see a lot of reasons why LOVFF Stock will move higher, and this is another.
Cannara Biotech LOVFF Stock Forecast
Cannara Biotech DCF
| Assumptions | |
|---|---|
| Tax Rate | 25% |
| Discount Rate | 8.000% |
| Perpetural Growth Rate | 25.0% |
| EV/EBITDA Mulltiple | 30.0x |
| Transaction Date | June 1, 2022 |
| Fiscal Year End | 12/31/21 |
| Current Price | $0.195 |
| Shares Outstanding | 876,981,321 |
| Debt | $33,200,000 |
| Cash | $3,100,000 |
| Market Value | |
|---|---|
| Market Cap | $69,807,713 |
| Plus: Debt | $33,200,000 |
| Less: Cash | $3,100,000 |
| Enterprise Value | $99,907,713 |
| Equity Value/Share | $0.0796 |
| Discounted Cash Flow | Entry | 2022 | 2023 | 2024 | 2025 | 2026 | Exit | |
|---|---|---|---|---|---|---|---|---|
| Date | June 1, 2022 | Dec 31, 2022 | Dec 31, 2023 | Dec 31, 2024 | Dec 31, 2025 | Dec 31, 2026 | Dec 31, 2026 | |
| Time Periods | 1 | 2 | 3 | 4 | 5 | |||
| Year Fraction | 0.58 | 1.00 | 1.00 | 1.00 | 1.00 | |||
| EBIT | $8,750,000 | $13,750,000 | $22,500,000 | $32,500,000 | $43,750,000 | |||
| Less: Cash Taxes | $2,187,500 | $3,437,500 | $5,625,000 | $8,125,000 | $10,937,500 | |||
| Plus: D&A | $1,225,000 | $1,750,000 | $2,625,000 | $3,500,000 | $4,375,000 | |||
| Less: Capex | $3,500,000 | $5,000,000 | $7,500,000 | $10,000,000 | $12,500,000 | |||
| Less: Changes in NWC | -$3,500,000 | -$5,000,000 | -$7,500,000 | -$10,000,000 | -$12,500,000 | |||
| Unlevered FCF | 1 | $7,787,500 | $12,062,500 | $19,500,000 | $27,875,000 | $37,187,500 | ||
| (Entry)/Exit | -$99,907,713 | $585,156,250 | ||||||
| Transaction CF | - 0 | $4,542,708 | $12,062,500 | $19,500,000 | $27,875,000 | $37,187,500 | $585,156,250 | |
| Transaction CF | -$99,907,712 | $4,542,708 | $12,062,500 | $19,500,000 | $27,875,000 | $37,187,500 | $585,156,250 |
| Intrinsic Value | |
|---|---|
| Market Value | 558% |
| Upside | 57% |
| Intrinsic Value | |
| Market Value | $0.08 |
| Upside | $0.44 |
| Intrinsic Value | $0.52 |
From a size perspective, you can see that Cannara Biotech is very big. Quebec province is the second largest province in Canada and is underserved relative to other provinces. Cannara Biotech has the ability to expand into the province and grow significantly. Plus, with the recent planting of a new wave of product, revenues will begin to show up in the financial reports.
Is Cannara Biotech LOVFF Stock A Good Investment?
With a small amount of grow space working to start, Cannara Biotech has already achieved net earnings profitability. The recent planting of a new wave of product will hit stores within 4-6 months’ time. That revenue should start to show up in about 2-3 quarters. Although the costs are already carried in this quarter, when the revenues and profits hit, these will be outsized relative to current revenue. If you factor in profitability at this point, as well as future outsized margins for these new products, Cannara Biotech is positioned to be even more profitable. It is because of this, I see big upside potential.
Cannara Biotech Financial Data
MariMed MRMD Stock Financial Data
| June 2018 | September 2018 | December 2018 | March 2019 | June 2019 | September 2019 | December 2019 | March 2020 | June 2020 | September 2020 | December 2020 | March 2021 | June 2021 | September 2021 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Revenues | $2.9 | $3.4 | $3.4 | $3.5 | $25.7 | $11.2 | $5.2 | $7.5 | $9.6 | $13.5 | $20.4 | $24.6 | $25.0 | $33.2 | |
| Cost of Goods | $0.9 | $1.5 | $0.5 | $1.3 | $16.7 | $6.5 | $2.4 | $2.6 | $3.5 | $4.8 | $8.7 | $11.5 | $9.0 | $15.0 | |
| Gross Income | $2.0 | $1.9 | $2.9 | $2.2 | $9.0 | $4.7 | $2.8 | $4.9 | $6.1 | $8.7 | $11.7 | $13.1 | $16.0 | $18.2 | |
| Gross Profit Margin | 69.0% | 55.9% | 85.3% | 62.9% | 35.0% | 42.0% | 53.8% | 65.3% | 63.5% | 64.4% | 57.4% | 53.3% | 64.0% | 54.8% |
| June 2018 | September 2018 | December 2018 | March 2019 | June 2019 | September 2019 | December 2019 | March 2020 | June 2020 | September 2020 | December 2020 | March 2021 | June 2021 | September 2021 | ||
| Revenues | $2.9 | $3.4 | $3.4 | $3.5 | $25.7 | $11.2 | $5.2 | $7.5 | $9.6 | $13.5 | $20.4 | $24.6 | $25.0 | $33.2 | |
| Total Operating Expenses | $1.6 | $2.4 | $6.3 | $2.5 | $3.6 | $3.7 | $36.6 | $3.9 | $4.1 | $5.3 | $3.0 | $6.1 | $7.4 | $11.6 | |
| Operating Income | $0.4 | -$0.5 | -$3.4 | -$0.3 | $5.4 | $1.0 | -$33.8 | $1.0 | $2.0 | $3.4 | $8.7 | $7.0 | $8.6 | $6.6 | |
| Operating Efficiency | 55.2% | 70.6% | 185.3% | 71.4% | 14.0% | 33.0% | 703.8% | 52.0% | 42.7% | 39.3% | 14.7% | 24.8% | 29.6% | 34.9% |
| June 2018 | September 2018 | December 2018 | March 2019 | June 2019 | September 2019 | December 2019 | March 2020 | June 2020 | September 2020 | December 2020 | March 2021 | June 2021 | September 2021 | ||
| Net Income | -$0.5 | -$3.5 | -$7.7 | $0.0 | $4.7 | -$7.4 | -$78.4 | -$2.4 | -$1.2 | $1.7 | $4.1 | $4.2 | $7.5 | $2.0 | |
| Diluted EPS | $0.00 | -$0.02 | -$0.04 | $0.00 | $0.02 | -$0.03 | -$0.41 | -$0.01 | $0.00 | $0.00 | $0.01 | $0.01 | $0.02 | $0.01 | |
| Dividend Per Share | $0.00 | $0.00 | $0.00 | $0.00 | $0.00 | $0.00 | $0.00 | $0.00 | $0.00 | $0.00 | $0.00 | $0.00 | $0.00 | $0.00 | |
| EBITDA | $0.6 | -$0.5 | -$3.0 | $0.1 | $5.6 | $1.3 | -$33.4 | $1.6 | $2.6 | $4.0 | $8.6 | $7.7 | $12.7 | $7.3 | |
| EBITDA/Revenue | 20.7% | -14.7% | -88.2% | 2.9% | 21.8% | 11.6% | -642.3% | 21.3% | 27.1% | 29.6% | 42.2% | 31.3% | 50.8% | 22.0% |
| June 2018 | September 2018 | December 2018 | March 2019 | June 2019 | September 2019 | December 2019 | March 2020 | June 2020 | September 2020 | December 2020 | March 2021 | June 2021 | September 2021 | ||
| Cash On Hand | $5.1 | $6.0 | $4.1 | $4.2 | $3.5 | $0.1 | $2.2 | $2.6 | $3.1 | $3.3 | $4.4 | $13.6 | $18.3 | $26.0 | |
| Free Cash Flow | -$0.03 | -$0.03 | -$0.07 | -$0.12 | -$0.09 | $0.01 | -$0.18 | -$0.02 | $0.00 | $0.00 | $0.00 | $0.01 | $0.02 | $0.01 | |
| Total Assets | $45.4 | $57.1 | $83.0 | $97.6 | $133.7 | $137.1 | $61.6 | $65.3 | $67.8 | $72.5 | $76.4 | $90.0 | $102.9 | $118.2 | |
| Total Liabilities | $23.8 | $20.6 | $21.2 | $32.1 | $50.9 | $54.3 | $55.2 | $58.9 | $57.5 | $57.6 | $53.6 | $37.6 | $40.4 | $45.2 | |
| Total Equity | $21.6 | $36.5 | $61.8 | $65.5 | $82.8 | $82.8 | $6.3 | $6.4 | $10.3 | $14.8 | $22.8 | $52.4 | $62.5 | $73.0 | |
| Cash/Debt Ratio | 21.4% | 29.1% | 19.3% | 13.1% | 6.9% | 0.2% | 4.0% | 4.4% | 5.4% | 5.7% | 8.2% | 36.2% | 45.3% | 57.5% | |
| Book Value Per Share | $0.11 | $0.18 | $0.29 | $0.31 | $0.38 | $0.38 | $0.03 | -$0.03 | -$0.01 | $0.00 | $0.03 | $0.05 | $0.08 | $0.11 |
I started adding a position to these folks. They sound like they pretty much will strongarm the Quebec market and with it barely tapped, I don’t see how the stock price doesn’t rise significantly in the next five years. Now the question is, how far can the stock rise in price in the coming years. Feels like a solid long-term investment to me!
@jpynestergmail-com
Agreed. Quebec is weird with its laws. That works to the advantage of those inside the province. They are #3 producer in capabilities in all of Canada for now. Their size means they will probably succeed regardless.