I have been watching The Green Organic Dutchman TGODF stock for some time starting back in 2018 when they first started ramping up. However, they never seemed to gain traction and move forward in a positive direction. Recently, they have been popping up in some of my Top 10 videos that I do. Notably, they have made strides in revenue gains and gross margins. They have certainly gained some ground in the Complete List of Top 100 Cannabis Companies.
In one of my One-On-One Zoom calls with Shai, you might recall that he mentioned a lot of the people he knows that have tried TGODF stock products end up exclusively using that product. That perked my ears up. So, I wanted to give TGODF stock a solid look and see if this was the beginning of something material.
The Green Organic Dutchman TGODF Stock Comparison
Here are the rankings that The Green Organic Dutchman have within the Complete List of Top 100 Cannabis Companies from the data I’ve culled from the company:
- #41 Market Cap: $74M
- #27 Revenue Growth Rate: 26.2%
- #19 Gross Margins: 58.4%
- #62 Operating Efficiencies: 153.2%
- #64 EBITDA/Revenue: -55.4%
- #53 Cash/Debt Ratio: 20.1%
- #23 Total Assets $110M
There are some positive numbers here, but, regrettably, some negative numbers as well. Still, I wanted to also put together a future look at the company and see what could be possible down the road.
The Green Organic Dutchman Stock Financial Data
I have broken out a lot of information from the financial data and I am going to present this data in a projection form while breaking down the costs involved with the future revenue gains.
Revenue
As mentioned, revenue gains were significant for The Green Organic Dutchman as they have hit a stride and are printing upwardly increasing revenues:
The big gain is misleading somewhat considering the latest drop in revenue from the quarter previous. I have been trying to sanitize these kinds of things out so that someone can spot this readily. Still, the latest quarter is a record for Green Organic Dutchman.
But, what is possible for the future?
Revenue Projections
I put together a projection for the next 6 quarters:
In this projection I used the average rate of growth for all of the cannabis stocks on a QoQ basis. On average, cannabis companies have been printing about 7.5% revenue growth rates. I used that metric to continuously increase revenues.
Also in the char, you can see the gross profits. I did this to show how gross margins and increasing revenues would continually increase gross profits.
Gross margins
One thing that The Green Organic Dutchman has been hitting its mark with is gross margins where the past two financial releases they printed 60%. I used that metric in the above cost-of-goods numbers to get the gross profits above:
If The Green Organic Dutchman can continue with this gross margin level they will be competitive versus other cannabis companies.
Total Operating Costs
For this projection, I needed to show the absolute number for Operating Costs:
Operating costs are those costs not directly associated with creating the product. This is more SG&A – Sales, General, & Administrative. This is basically the corporate office. There is some consistency in the numbers. Green Organic Dutchman was running much higher numbers but, they cut these costs.
Operating costs are likely not linear nor set. As more and more product is sold, despite generating more revenue, operating costs may go upward as well (Think Sales costs). This is evident with the latest record revenue print from this quarter and operating costs that went upwards also.
Operating Efficiencies
To get efficiency numbers, simply take the operating costs and divide over revenue giving you a ratio, or percentage, called Operating Efficiencies:
As it turns out, despite the increase in revenues, the solid gross margins, operational costs are 153% of total revenue. There is no math in the world that can make this trickle into profits; operating costs are way too high.
The very best companies print approximately 30% – 35% in operating efficiencies. In summary, from an operational perspective, relative to revenue, The Green Organic Dutchman is not efficient.
EBITDA Profits
EBITDA profits are the first real giant milestone for a fledgling company to achieve after production begins. The Green Organic Dutchman is falling short:
EBTIDA is basically operating profits with Depreciation & Amortization added back in. This is the core of the company. If revenues can cover the costs of the core of a business then, all a company has to do is scale upwards. Every additional unit sold would add marginal profits at an increasing rate that would go towards paying continuing costs and eventually adding to net earnings at the bottom of the financial statement.
Net Earnings
For net earnings were a significant sore spot for The Green Organic Dutchman:
Despite the previous quarter’s profits, this quarter’s loss will eat into cash on hand. As of the latest financial statement, The Green Organic Dutchman had all of $6.5M of cash on hand. They just burned through $26M; they will need to go to the cash register. This is dilutive and will pressure TGODF stock downward.
Total Equity
What I found interesting is that TGODF has some $110M in total equity; assets over liabilities. And, this amount was competitive in this metric:
Nonetheless, the downward trend is noticeable. Management’s job is to increase assets and equity for shareholders. These assets are what generate the potential of any company. This chart, for all intents and purposes, is trending lower. This is a bit of a warning sign for me and the next chart sort of seals that up for TGODF Stock.
Cash/Debt Ratio
Cash may become a problem and that problem may start showing up immediately. Above, I showed that The Green Organic Dutchman dropped -$26M last quarter. They only have $6M in cash as of the last financial statement. In the meantime, their cash/debt ratio is within a decent range:
So, while they are competitive with their cash/debt ratio, this is a long way from being solidly positioned with cash on hand. They are going to be forced to go to the ATM to grab some working capital. This will shift metrics such as total assets and cash/debt ratio. But, this shift is at the expense of existing shareholders.
Green Organic Dutchman Stock Chart
My expectation that there will be an immediate cash raise will start to affect the current stock price of TGODF.
TGODF Stock Chart
For now, there is subtle pressure on TGODF stock:
I believe we may see a significant drop in the stock in the coming days & weeks.
Is The Green Organic Dutchman TGODF Stock A Good Buy?
Revenues are increasing nicely and, I think that is a solid thing. Gross margins are very competitive. But, operating costs are far too high at this point. I would be interested to see if revenue accelerates beyond the current rate of growth. But, the operating cost situation is concerning.
I put together a projection going forward for the next 6 quarters. Revenue was constantly increasing and gross margins I kept at solid rates. But, even with this the hurdle of operating costs was not jumped over. Also, cash on hand is problematic and they are going to need more to sustain themselves. This is dilutive and could push the stock lower significantly.
Given this, I would pass on The Green Organic Dutchman right now. But, I am interested in whether or not a plan is in place to leap over some of the concerns I have outlined. With revenue growth and customer loyalty to the brand, that may be a potential opportunity.
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