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Organigram OGI Stock Forecast & Analysis

Organigram OGI stock released Q1 2022 financial earnings and I wanted to look at what is going on with the data and start to do the OGI Stock Forecast.  There were two big stand-outs for Q3; record revenue and moving EBTIDA profitability target to Q3 versus Q4.  This means revenues will be accelerating, margins will be improving, and profits are advancing.  All good.  The importance of this is that OrganiGram, OGI Stock, is NASDAQ-traded and widely held.  OGI stock, like many other cannabis stocks, are starting to really accelerate in their moves upwards; here’s to hoping this is a solid trend.  If OGI stock continues higher, this will draw in the necessary attention to create the buzz to attract more investors into the industry.  That, in turn, will provide a feedback loop of even more investors playing catch-up and pushing the market even higher.  Again: All good!

Keep in mind, achieving EBTIDA profitability is a major step for a newer company.  This means the core costs are being covered.  From there, if a company continues to scale up, marginal profits, those profits after the initial units moving through production & distribution, have larger margins.  The big costs will have been paid for already.  Next, the additional units will add outsized profits to the company’s bottom line.  In the case of such a higher-visibility stock such as OrganiGram Holdings, OGI stock, this is a significant move for the entire industry.

As it is, there are other factors that may be moving the markets, that being Cannabis Federal Legalization and the discovery that Cannabis Prevents & Cures COVID.  With continued profit increases from the highest-profile cannabis companies as well as significant positive developments elsewhere, it is no wonder we are seeing such an about-face turn-around with undervalued marijuana stocks.

Organigram OGI Q3 Comparison

OrganiGram OGI stock Forecast Logo - Is OrganiGram OGI Stock a good investment
OrganiGram Company Logo

Here are the numbers for comparing the cannabis companies on my Complete List of Top 100 Cannabis companies:

  • #16 Market Cap: $491M
  • #19 Revenue Growth Rate: 21.6%
  • #81 Gross Margins: 13.2%
  • #37 Operating Efficiencies: 58.9%
  • #19 EBITDA/Revenue: 14.2%
  • #5 Cash/Debt Ratio: 247.4%
  • #13 Total Assets: $62M

As I always do, I compare financial data from one company to another in my Complete List of Top 100 Cannabis companies.  There is defintiely room for improvement, but, OrganiGram has already basically said this is where they are headed in just 2 quarters.

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OrganiGram OGI Stock Forecast – Q3

Normally, I would do the OGI stock forecast using a discounted cash flow statement.  However, one of the key variables is that a company be EBTIDA profitable.  I will wait to put this together until OrganiGram achieves this level in just 2 short quarters.  I have seen analyst projections hitting $4.50.  But, that seems to me to be a bit low.

OrganiGram Q3 Financial Data

Here is a breakdown of OrganiGram Q3 financial data.  For a full breakdown of OrganiGram OGI stock numbers.

OrganiGram Q3 Gross Profits

  • Organigram OGI Stock Q3 Revenue

Revenues hit an all-time high for OrganiGram.  But, if you merely look at the chart, the growth rate is not as high as other companies.  Still, record-high revenue is always an impressive metric to achieve.  But, there were some write-offs that would adjust gross margins.  So, more consistency is needed.

Nonetheless, in order for OrganiGram to achieve their Q3 stated goals of EBTIDA profitable, gross margins need to rise.  That means there are going to be continued improvements with the financial data.

I have heard of concerns about slower growth in Canada for cannabis.  This is something that may affect the outcome, and something I am looking at.

OrganiGram Q3 Operating Profits

  • Organigram OGI Stock Q3 Gross Margins

Operating efficiencies are close to wheelhouse numbers.  The important thing to look at is that as OrganiGram worked over the past periods, they achieved better and better results, getting themselves to a point where they learned to be profitable doing their thing of growing, processing, and selling cannabis.  Because of this, that culture of knowledge will propel them forward with better and better numbers.

At the same time, although there will be advances in revenues from the sales of cannabis products, operating costs are likely to remain contained.  Operating costs are Sales, General, & Administrative (SG&A).  Sales may continue higher, but at a relatively slower pace than revenue growth.  Administrative is very likely to remain contained.  Given this, advances in revenues will likely see a decline in the operating efficiency numbers; an improvement.

OrganiGram Q3 EBTIDA & Net Profits

  • Organigram OGI Stock Q3 EBITDA

There was a contraction of net losses.  This is positive.  There is a cash-burn rate, but OrganiGram has ample cash.  And, if they hit the EBITDA profit levels, and can then turn net earnings positive, the changes to net working capital will be positive and the flow to the war chest will allow OrganiGram to start moving to a new phase for the company and perhaps begin acquiring more companies that are accretive, such as the most recent deal they are set to complete.

OrganiGram Q3 Cash On Hand

  • Organigram OGI Stock Q3 Cash Debt Ratio

OrganiGram is positioned to be close to the top with cash on hand versus debt. They have ample cash and little debt.  The only crux that OrganiGram really has is the cash burn, which at this point is minimal.

Also, there is always the potential for OrganiGram to turn to their strategic partners, British American Tobacco, and raise any funds via debt or stock, to allow for expansive opportunities.  Being in such a strong position with a big, and experienced player in the background is something that will likely accelerate OrganiGram over the years.

OrganiGram Q3 Total Equity

  • Organigram OGI Stock Q3 Total Equity

As I mentioned, there is little debt to speak of when you look at the numbers.  Total equity is the engine that drives future revenues.  Equity is driven by assets, which a company needs in order to build a company.

But, OrganiGram’s total equity is flat-ish.  I’d want to see a chart here that is pushing upwards far more; I have plenty of other charts from other companies doing just that.

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Is OrganiGram OGI Stock A Good Investment?

Organigram OGI Stock forecast & analysis showing ogi stock falling

To me, OrganiGram is an important cannabis stock.  I am fully exposed to cannabis stocks, in general.  Given that, I would not necessarily rush to buy this particular stock.  But, the importance is the exposure.  If OrganiGram continues to move higher, then this will bring in other investors.  Major news outlets do not necessarily push for smallish OTC stocks but, do content on the bigger Nasdaq stocks.  To me, that is very important.

Because of that, this is why I have no problem getting involved in the OTCs; there is a bigger bang-for-the-buck, so to speak.  I follow OGI stock because of its importance, not because I have any burning desire to own the stock.  But, because of its ability to make headlines and draw in investors.  That being said, moving to profitability at a quicker pace is very important and if anyone is actually sitting on this stock, they are likely to do very well over a long period of time.

Also, it is very possible that I end up with OGI stock simply because I expect many of these bigger players to start making other moves to increase their portfolio, and importance.  If you are holding on to OGI stock, I would continue to do so.

OrganiGram Financial Data

OrganiGram Holdings OGI Stock Financial Statements

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