Curaleaf CURLF stock forecast is listed below given for Q3; one of the biggest keys to cannabis investments. But I am revising this somewhat based on the new Curaleaf Q4 financial data just released. Curaleaf posted a solid year of performance doubling revenue year-over-year. But, the final quarter saw only a 1% increase in revenue. And, future revenue is downgraded to ~$1.3B – ~$1.4B versus market expectations of approximately $1.6B. However, despite that downgrade, Curaleaf saw improved margins for the final quarter showing that they are getting more efficient at producing cannabis (Follow along in the CURLF stock Forum).
So, less revenue but, higher margins; how will that play out for the company’s stocks, CURLF Stock?
A mere 1% increase in revenue was all that we got from Curaleaf this quarter. Given all of the kerfuffle in Eastern Europe and the perceived attachment of Boris Jordan to Russia, CURLF could have used a break. All cannabis stocks are heavily beaten down. But, there is value here in these stocks. It is intrinsic value. But, the market is not ready to realize this. However, there are winds of change happening and, I firmly believe that this will be a huge year for cannabis investments.
Previous video analysis done on CURLF stock forecast:
Curaleaf Company Comparison
As I always do, I compare each company to all other cannabis companies. This allows any individual to see how any one performance sizes up to all other companies. The listing encompasses key metrics to show how well each respective company sizes up.
Here are the numbers for comparing the cannabis companies on my Complete List of Top 100 Cannabis companies:
Visit the Curaleaf CURLF Stock Forum
Find out what others have to say about Curleaf CURLF stock in the Curleaf CURLF Stock Forum
Curaleaf Financial Data
Curaleaf Gross Profits
A mere 1% in revenue growth for the quarter for the biggest cannabis stock sounds bad, but, Curaleaf also doubled its revenue Year-Over-Year. Plus, there are expectations of an increase of 15% from 2021 to 2022 to take Curaleaf revenues to $1.35B. However, I am already seeing reports for $1.89B for 2023. Given these projections, you can see that the long game is playing out as Curaleaf management has continually iterated in its investor presentations. The message has always been consistent. But, investor sentiment has not nor, has investor sentiment been consistent with expectations even though Curaleaf management has guided otherwise.
Margins remain about the same from a cost of goods versus revenues perspective. However, EBITDA profits increased and this was not driven via gross profits. Therefore, it must have come from an operational standpoint.
Curaleaf Operating Profits
On a relative basis, operating profits 5% QoQ despite the 1% increase in revenue. This shows that Curaleaf is getting more efficient from an operational perspective. The fact that revenue moved upward so little, but operating efficiencies improved on a non-linear basis are important to me. For Q4, Curaleaf moved its operating efficiencies to 36.7% from 45% (It is a ratio so, you want the lowest possible number).
Further, I expect that Curaleaf could improve even more operationally. And, if revenues do increase as they are over the course of the next four quarters, the potential to see operating efficiencies near the 32.5% level. Ranges between 30% – 35% are where the top-performing companies come in at. Given economies of scale, increasingly higher products numbers working through the system, this is no large feat for Curaleaf.
This is an opportunity for long-term investors because the increased revenue gains will show that Curaleaf will be able to bring in larger profits on a percentage basis. For now, investors are not realizing this intrinsic value.
Curaleaf EBITDA & Net Earnings
As I mentioned, EBITDA improved and was driven by relatively the improvements in operating efficiencies. But, I also see the potential for gross margins to improve even more; this will improve EBTIDA & Net earnings profits. As of now, gross margins are 50% on $320M revenue and operating efficiencies are 36.7%. But, if revenues increase as we expect, and so do margins because of marginal profits via economies of scale, this is where the real bang-for-the buck comes in.
On the probabilistically $1.35B for 2022, an increase of ~$100M in revenue Year-Over-Year, could easily push margins upwards for the year. If Curaleaf were to hit an additional 10% in gross profits on top of the current ratio, that amounts to $10M trickling downward to EBITDA and Net Earnings.
Factor in a potential 5% more in operating efficiencies, then this is where you really see the potential for profit increases.
Curaleaf Cash On Hand
On a comparative basis, Curaleaf has a low amount of cash relative to debt. But, should they turn Net Earnings break-even, things change rapidly and there can be some real adjustments to the outlook of Curaleaf as they potentially do acquisitions and more CapEx. Get to break even, and you no longer have a cash burn rate but, a positive net working capital gain.
Look for the potential of this turn around.
Curaleaf Total Equity
Curaleaf is also not growing total equity too rapidly on a comparative basis when you look at other companies. Equity, via the accumulation of assets at a rate that is greater than debt, is the engine that gives a company the ability to generate revenue & profits. The rate of increase here is not top-performing. But, the cash burn rate may be the factor driving this. And, as organic growth continues to push margins higher, if Curaleaf can capitalize on this, they potentially can start generating more and more total equity.
Curaleaf CURLF Stock Forecast
Here is the methodology for Curaleaf stock forecast using a discounted cash flow statement. Below, you can find the appropriate information on my CURLF Stock forecast and what to expect with Curaleaf stock news:
Curaleaf CURLF Stock Discounted Cash Flow Calculation
| Assumptions | ||
|---|---|---|
| Tax Rate | 25% | |
| Discount Rate | 8.000% | |
| Perpetural Growth Rate | 25.0% | |
| EV/EBITDA Mulltiple | 35.0x | |
| Transaction Date | December 31, 2021 | |
| Fiscal Year End | 12/31/21 | |
| Current Price | $7.500 | |
| Outstanding Shares | 725,000,000 | |
| Debt | $1,430,000,000 | |
| Cash | $317,000,000 |
| Market Value | ||
|---|---|---|
| Market Cap | $5.475B | |
| Plus: Debt | $1.43B | |
| Less: Cash | $317M | |
| Enterprise Value | $6.55B | |
| Equity Value/Share | $7.50 |
| Discounted Cash Flow | Entry | 2022 | 2023 | 2024 | 2025 | 2026 | Exit | |
|---|---|---|---|---|---|---|---|---|
| Date | Dec 31, 2021 | 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 | 1.00 | 1.00 | 1.00 | 1.00 | 1.00 | |||
| EBIT | $440,000,000 | $600,000,000 | $675,000,000 | $750,000,000 | $825,000,000 | |||
| Less: Cash Taxes | $110,000,000 | $150,000,000 | $168,750,000 | $187,500,000 | $206,250,000 | |||
| Plus: D&A | $160,000,000 | $200,000,000 | $225,000,000 | $250,000,000 | $275,000,000 | |||
| Less: Capex | $80,000,000 | $100,000,000 | $112,500,000 | $125,000,000 | $137,500,000 | |||
| Less: Changes in NWC | $0 | -$50,000,000 | -$100,000,000 | -$150,000,000 | -$175,000,000 | |||
| Unlevered FCF | 1 | $410,000,000 | $600,000,000 | $718,750,000 | $837,500,000 | $931,250,000 | ||
| (Entry)/Exit | ||||||||
| Transaction CF | - 0 | $410,000,000 | $600,000,000 | $718,750,000 | $837,500,000 | $931,250,000 |
| Rate of Return | ||
|---|---|---|
| Target Price Upside | 127% | |
| Internal Rate of Return (IRR) | 27% | |
| Market Value vs Intrinsic Value | ||
| Market Value | $7.500 | |
| Upside | $9.56 | |
| Intrinsic Value | $17.06 |
Is CURLF Stock a Good Investment
By assets, market capitalization, and revenue, Curaleaf is the biggest cannabis company there is. And, as far as cannabis investments, I think this stock has a lot of potential.
Economies of scale will allow Curaleaf to really drive its margins more and more; they are finally at that point. Most of this is going to come from organic growth and utilization of existing assets such as current dispensaries & grow facilities. As Curaleaf pushes more and more with its margins, it will grow its bottom line.
I think now, more than ever is that opportunity where you will start to see the potential profitability of Curaleaf.
Curaleaf Stock Financial Data
Verano Holdings VRNOF Stock Financial Statements
| December 2019 | March 2020 | June 2020 | September 2020 | December 2020 | March 2021 | June 2021 | September 2021 | ||
|---|---|---|---|---|---|---|---|---|---|
| Revenues | $24.3 | $42.8 | $75.0 | $64.4 | $74.0 | $143.3 | $198.7 | $207.0 | |
| Cost of Goods | $10.3 | -$4.4 | $32.0 | -$50.7 | $17.3 | $54.0 | $98.5 | -$15.3 | |
| Gross Income | $14.0 | $47.2 | $43.0 | $115.1 | $56.7 | $89.3 | $100.2 | $222.3 | |
| Gross Profit Margin | 57.6% | 110.3% | 57.3% | 178.7% | 76.6% | 62.3% | 50.4% | 107.4% |
| December 2019 | March 2020 | June 2020 | September 2020 | December 2020 | March 2021 | June 2021 | September 2021 | ||
|---|---|---|---|---|---|---|---|---|---|
| Revenues | $24.3 | $42.8 | $75.0 | $64.4 | $74.0 | $143.3 | $198.7 | $207.0 | |
| Total Operating Expenses | $8.2 | $9.0 | $20.0 | $11.8 | $19.7 | $32.1 | $57.8 | $36.5 | |
| Operating Income | $5.8 | $38.2 | $23.0 | $103.3 | $37.0 | $57.2 | $42.4 | $185.8 | |
| Operating Efficiency | 33.7% | 21.0% | 26.7% | 18.3% | 26.6% | 22.4% | 29.1% | 17.6% |
| December 2019 | March 2020 | June 2020 | September 2020 | December 2020 | March 2021 | June 2021 | September 2021 | ||
|---|---|---|---|---|---|---|---|---|---|
| Net Interest Expense | -$1.4 | -$3.9 | -$3.8 | -$4.2 | -$3.2 | -$1.8 | -$5.5 | -$8.1 | |
| Other Non-Operating Income | -$0.1 | -$0.2 | -$0.1 | -$1.6 | $1.1 | -$1.3 | $0.4 | -$0.5 | |
| EBT Inc. Unusual Items | $4.1 | $34.5 | $27.7 | $98.1 | $35.9 | $114.1 | $13.1 | $178.0 | |
| EBT Excl. Unusual Items | $9.1 | $34.5 | $27.7 | $98.3 | $35.9 | $114.1 | $12.7 | $178.0 | |
| Tax | $4.2 | $13.9 | $15.1 | $17.9 | $32.8 | $45.3 | $5.1 | $73.7 | |
| Earnings From Cont. Ops. | $4.9 | $20.6 | $12.5 | $80.5 | $3.1 | $68.8 | $7.6 | $104.3 |
| December 2019 | March 2020 | June 2020 | September 2020 | December 2020 | March 2021 | June 2021 | September 2021 | ||
|---|---|---|---|---|---|---|---|---|---|
| Net Income | $4.0 | $20.4 | $25.7 | $75.4 | $6.0 | $68.1 | $32.0 | $15.0 | |
| Diluted EPS | $0.29 | $1.35 | $0.04 | $4.75 | $0.37 | $0.27 | $0.03 | $0.33 | |
| Dividend Per Share | $0.00 | $0.00 | $0.00 | $0.00 | $0.00 | $0.00 | $0.00 | $0.00 | |
| EBITDA | $0.00 | $40.4 | $38.7 | $105.8 | $37.9 | $120.6 | $81.0 | $111.0 | |
| EBITDA/Revenue | 0.0% | 94.4% | 51.6% | 164.3% | 51.2% | 84.2% | 40.8% | 53.6% |
| March 2020 | June 2020 | September 2020 | December 2020 | March 2021 | June 2021 | September 2021 | ||
|---|---|---|---|---|---|---|---|---|
| Cash On Hand | $0.0 | $6.4 | $35.1 | $16.4 | $111.6 | $149.7 | $56.7 | |
| Free Cash Flow | $0.0 | $0.00 | $0.00 | $0.00 | $0.00 | $0.00 | $0.00 | |
| Total Assets | $0.0 | $0.0 | $393.4 | $459.3 | $1,779.3 | $2,193.1 | $2,686.0 | |
| Total Liabilities | $0.0 | $100.0 | $164.4 | $216.6 | $515.1 | $708.6 | $519.0 | |
| Total Equity | $0.0 | $116.8 | $228.6 | $242.7 | $1,264.2 | $1,484.5 | $2,686.0 | |
| Cash Debt Ratio | 0.0% | 6.4% | 21.4% | 7.6% | 21.7% | 21.1% | 10.9% | |
| Book Value Per Share | $0.0 | $8.03 | $14.06 | $15.12 | $4.31 | $4.83 | 5.39 |
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