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TILT Holdings TLLTF Stock Forecast & Analysis

TILT Holdings, TLLTF stock is a stock that gets a lot of attention on social media.  There really is nothing exceptional about TILT Holdings that would drive this attention.  Just like the other 108 stocks on the website I cover here, TILT Holdings has products and they have a plan.  Oddly, and despite the kerfuffle that many give TILT Holdings, TLLTF stock simply does not have a valuation that makes sense.  So, I wanted to walk through TLLTF stock and do the TLLTF stock forecast & analysis with price target.

I do want to point a few things out.  First, the social media.  After doing this analysis, it makes no sense that TLLTF stock is down as low as it is.  This is a solid company.  And, considering the number of individuals that cheerlead for this stock, one would think it is highly improbable that the stock would be so head-scratchingly low.  But, it is.

When Cannabis Stocks Hit

Given the fact that I see cannabis stocks being so low, it is important to point out that we are very likely on the cusp of something extraordinary occurring with cannabis stocks.  Cannabis stocks have been obliterated the past year.  In fact, all stocks are down now that the Federal Reserve is starting to put into place aspects of taming inflation, increasing interest rates and removing policy liquidity.

But, very likely, we are about to see the Senate introduce their version of cannabis legalization.  They are meticulously writing out a new bill that could potentially change everything.  The bill will have bipartisan inclusion as Senator Schumer has reached accords the aisle to other Senators for input.  Those other Republican senators likely are cannabis legal in one form or another.  Keep in mind, 38 states have some form state legalization.  Is it more than 38 already? I can’t keep track.

Regardless, with the stock market down as bad as it is, and with something potentially brewing in cannabis stocks, this could really invigorate the masses into buying up cannabis stocks, and likely handing short sellers their backsides as they rush to cover.

Then, the TILT Holdings social media legion will kindly offer some advice as to which cannabis stocks are likely to perform the best.  Maybe they will even point out this video and analysis, and use that as proof of potential.

As the stock starts to move upward, short sellers covering, new buyers rushing in, a frenzy will ensue.

Feedback loop

All Schumer will have to do is merely introduce a bill.  Absolutely, he will tell anyone who listens that there was a tremendous amount of work involved in getting this introduced, that it is comprehensive, and that many Republicans gave input.  And, so it will begin.

TILT Holdings Without The Noise

Despite the potential of what any cannabis federal legalization can provide, TILT Holdings itself has its own merits.  However, and for no real unknown reasons, TILT Holdings is undervalued in a disproportionate way.  All cannabis stocks are undervalued but, not as much on a relative basis as TILT Holdings.  And, I have no idea why.  It just is.

TILT Holdings has some offerings that are slightly different than others such as their vape products.  These products are being offered to other companies and that business will grow.

In the meantime, infamously, I do not consume cannabis… despite the fact that my birthday is 4/20 and that I run this site.  I do consume cannabis financial data.  And, if a company actually does have a product portfolio that does well in the broader market then, this will strike a cord with me.

That being said, TILT Holdings lost their backside with a revenue decline in the latest quarter.

More on the horizon

TILT Holdings are going to be opening a few dispensaries which, this foundation will drive future revenue.  Plus, with the vape business building up with other cannabis companies, revenues will continue to grow.  That foundation appears to be forming and will grow.

Look for approximately $255M to be printed this year.  However, TILT is behind the 8-ball, so to speak with its recent decline in revenue.  This may be problematic when you consider that the models being priced first require TILT Holdings to hit their respective revenue goals in order for TLLTF stock to achieve its goals.

But, TILT Holdings also has to be able to hit margin levels.  For now,  gross margins are on the softer side but, economies of scale on increased products moving out the door will improve that.  Then, operating efficiencies are actually nicely positioned and, increases in gross revenues are going to improve this even further.

Ultimately, TILT Holdings is still early in its growth stage and will get there.  This is the story of many cannabis stocks.

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TILT Holdings Financial Data

Here is the latest financial data on TILT Holdings and what I am using to analyze them.  I will update as often as possible.

TILT Holdings Gross Profits

  • TILT Holdings Revenue

For the first quarter, there was a large drop in revenue.  Management attributed this to some headwinds.  But, management is also confident that TILT Holdings will print their $255M this year.  They will be behind the 8-ball for the next three quarters.  However, with dispensary openings getting on their way, if these businesses scale up then, expect TILT Holdings to hit its mark.

With increased dispensaries, this translates into increased opportunities for gross margin improvements.  Scaling up dispensaries will mean that grow facilities will service more customers through these dispensaries.  Pushing more product through their systems will mean costs will be spread out over more products and, margins will improve.

This is the beauty of where some of these cannabis stocks are at this point. All of the difficult work is now behind them and building up larger and larger businesses is what is happening.

TILT Holdings Operating Profits

  • TILT Holdings Operating Costs

Operating profits are fairly in line with where most other cannabis companies are.  In fact, with the doubling of revenue over the next few years, operating efficiencies will have the ability to improve even further.  Operating costs, on a relative basis, tend to be closer to 17.5% for the S&P 500.  But, for now, and because a lot of cannabis companies are still gearing up and building their respective foundations, cannabis numbers tend to be around 30% – 35%.  The better companies are already hitting below this, and these are cost conscience companies that you would want to keep an eye on.

Whereas there is likely to be bigger improvements in gross margins, look for marginal gains here as revenue climbs.  This will be a spot where an investor will be able to see the ability for the stock to improve as these costs, on a relative basis, continue to improve.

TILT Holdings EBITDA & Net Profits

  • TILT Holdings EBITDA

Scaling up will get TILT Holdings closer to profitability on a consistent basis.  This is the consistent story for many of the cannabis stocks out there that are nearing this stage.  I used a softer number going forward with the EBIT numbers in the projection below.  My expectation is that TILT Holdings hits roughly 20% of revenue for this year.  From there, with continued scaling up, revenue will climb and I put EBIT rates at 30% for the final year.  The average for the S&P 500 is roughly 22.5%.

TILT Holdings Cash On Hand

  • TILT Holdings Cash on Hand

I would love to see a lot more cash on hand.  Cash is oxygen to a company that is unprofitable.  Cash is what is necessary to fund operations and keep a business afloat.  Given this, the Cash:Debt ratio is lower than most.  This is somewhat of a concern but, TILT Holdings does have enough equity that they will have access to cash and be able to raise what they need.

However, scaling up is key to the next phase for TILT Holdings.  If they can scale up, achieve a higher rate of EBITDA/Revenue, and even achieve net earnings profitability, then they will also be able to pay down debt as they will not be taking on more.  Plus, with the dispensaries opening, this will be further assets that can be added to their portfolio.  This will give TILT Holdings the ability to leverage its future and borrow against, expanding its foundation even further.  But, for now, TILT Holdings’ cash on hand is low on a relative and foundational basis.

TILT Holdings Total Equity

  • TILT Holdings Total Assets

One of the key indicators that I look for in a stock is total equity.  I always want to see increasing total equity.  The reason is simple: This will generate increasing revenues and, by extension, increasing profits.  TILT Holdings will get there.  But, for now, and until they get a better profitability track going, TILT Holdings is seeing declining total equity.

But, with opening dispensaries and other things going on with the company, revenues will increase and this will allow TILT Holdings the ability to bring in free cash flow.  The dispensaries that will be opened soon and those that are coming to scale, are going to add to total equity.  So, I do see changes here coming.

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TILT Holdings TLLTF Stock Forecast

TILT Holdings TLLTF Stock DCF

For now, TILT Holdings is just shy on EBIT revenue metrics.  So, I started out progressively slower with margins easing the company along.  But, as economies of scale continue to increase via bigger revenue increases, this will translate into the numbers playing out.  TILT Holdings will get there, along with many cannabis stocks for those holding these stocks.

I used a very soft number for the EV/EBITDA metric.  When you consider the cohorts owning this stock, using 30 was very soft on my part.  You start pushing this number higher to about 40, 50, or higher, and then TLLTF stock starts trading above $10.00 a share.

TILT Holdings does not have a ton of debt considering where they are and this metric really helps out with the stock hitting this target.

Is TILT Holdings TLLTF Stock A Good Investment?

TILT Holdings TLLTF Stock Forecast & Analysis Chart

Like all cannabis stocks, TILT Holdings is undervalued.  But, and as I mentioned, TILT Holdings is undervalue a lot more than the average. And, as I also have stated, I have no idea why TILT Holdings is disproportionately lower than many other cannabis stocks.  But, TLLTF is an opportunity that will pay well over many years’ time.  The eventuality is that the process plays out, that cannabis companies will build their respective foundations, build revenues, and eventually get to profitability.

And, the Federal government, in some capacity or another will allow for cannabis companies to do banking as well as up-list to the big boards.  This is a process and, these cannabis stocks will get there.

Then, this process will unfold in a way that means cannabis stocks will be bought up by very big players such as retirement funds and hedge funds.  This will be very supportive of cannabis stocks broadly.  That alone is what will drive the future of these stocks.

In the meantime, when you break down the potential of cannabis stocks, you see the long term opportunity of holding on to something with massive upside potential.

TILT Holdings has a great deal of upside.  They will increase their foundation and build up a solid business.  They will achieve profitability.  And, this will be a cash cow opportunity.  Considering where TLLTF stock lay at this point, the downside is minimal.  The upside is enormous.

TILT Holdings Financial Data

TILT Holdings TLLTF Stock Financial Data

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