Verano Holdings VRNOF stock is poised for significant upside. This is one of the best cannabis stocks – My Top Picks to buy. The most recent financial release shows that this is one of the cannabis companies that is poised to move higher. Revenues are on track for $800M for the fiscal year. VRNOF stock has already printed about $350M and will print an additional $450M in the next two quarters. But, it is Verano Holdings metrics that are most impressive. Revenue growth rate ranks as some of the highest consistent numbers amongst cannabis companies. Verano Holdings margins are strong and will continue to print solid gains. EBITDA/Revenue on a percentage basis for VRNOF stock puts them near the top 10. And, Verano Holdings VRNOF stock operating efficiencies are some of the best amongst cannabis companies.
Given the metrics of Verano Holdings, this marijuana stocks course to getting to $800M in revenue, and the future outlook I wanted to look intently at this particular cannabis company. I also believe that VRNOF stock may be one of the most undervalued marijuana stocks there are right now. With the metrics and revenue growth, this is a stock that will increase significantly.
What I really wanted to focus on is the forward looking numbers and where this could put VRNOF stock.
Verano Holdings VRNOF stock Comparison
I have compiled the Complete list of Cannabis Stock and this is where I compare cannabis companies to one another. As far as metrics go, Verano Holdings has consistently has some of the best metrics.
Here are the numbers where Verano Holdings compares versus other cannabis companies:
- Revenue Growth Rate: 38.1% – #21
- Revenue Per Share: $0.633 – #6
- Gross Margins: 50.4% – #31
- Operating Efficiencies: 29.1% – #11
- EBITDA/Revenue: 28.4% – #11
- Cash/Debt Ratio: 35.4% – #34
On a comparative basis, when you combine the numbers I see a very strong-performing company across the board. All of the individual metrics are ultra-competitive amounting to a company that is probably leading in regard to the collective metrics.
Verano Holdings Financial Data
Verano Holdings VRNOF stock is on track to printing $800M this year. They have ~$450M more to print and this looks doable considering what has been printed so far.
Verano Holdings Revenue
Revenues were up some 39% for the quarter, sequentially from $143M to $199M:
If Verano Holdings were to print $800M this year this marijuana stock would need to print an additional $457M more. This could easily be accomplished with a print of about $225M for two consecutive quarters, an increase of only about 10%. That is a far lower increase than the 39% just printed.
Management feels certain they can achieve these metrics handily. Possibly, Verano Holdings can push through the
Verano Holdings Gross Margins
Gross margins mellowed out a bit from previous. Still, at 50.4% these are lofty numbers. I do not doubt that these numbers will continue to remain lofty:
The average numbers I am looking at are some 60% – 65%. The latest financial numbers are a small miss from what Verano Holdings normally prints. Given that, I think the eventuality is that this number goes higher.
Still, at 50.4%, this is a lofty number when you consider the relative numbers from all other cannabis companies.
Verano Holdings Operating Efficiencies
Operating efficiencies are some of the best there are. If any one company prints anything in the 20s, I’d want to see consistency before I relied upon it. At 29.1%, this is almost the highest number Verano Holdings has ever printed:
I purposely created this chart with 100% being the top max number. Mostly, this shows perspective of how low these numbers actually are. The very best cannabis companies are printing about 30% – 35%. So, the solid 20s that Verano Holdings is printing are some of the best numbers that there are.
If Verano Holdings were to maintain these solid metrics, with no increases in total operating costs, while increasing revenues upwards the 10% they are looking to achieve, this would push operating efficiencies downward even more to perhaps 25%.
But, you need to crack a few eggs to make an omelet. Verano Holdings saw increases in its total operating expenses. This is within expectations because a company may start to do more advertising or, maybe there are some other operating costs involved that would push these metrics higher.
I’d be interested to see where these numbers come in. The 20s are exceptionally low.
Verano Holdings EBITDA Profit & Net Earnings
EBTIDA profitability remains positive but, there are some outlying numbers that were printed along the way:
EBITDA profits remain steady and high. The $56.6M over the $199M revenue is almost 30%. This puts the percentage at #11 on a comparison basis meaning that Verano Holdings is earning some of the highest profit percentages comparatively.
To put this 30% number in to perspective, the S&P 500 prints roughly 5% – 7.5% EBTIDA per revenue on a percentage basis. There are many cannabis companies that eclipse the numbers of the S&P 500. This is just further proof that the growth rates and profit metrics are far better for some of the best-performing cannabis companies versus the broader market. Granted, some cannabis companies are not even profitable on an EBITDA basis; about half are not.
Verano Holdings VRNOF Stock Chart
Like many other marijuana stocks, VRNOF stock has been sliding. This is outside of normal valuations. Trust the process because over the longterm, there will be large results.
Verano Holdings VRNOF stock projections
If the $800M actually gets printed this year how would that translate for VRNOF stock? When we look at the S&P 500 you can see how the broader market is valuing growth stocks. With interest rates as low as they are valuations are being pushed upwards in chase of yield.
If VRNOF stock prints $800M and can attain a few solid metrics we can apply the formula for how the S&P 500 is valued to VRNOF stock. With gross margins of 65%, operating efficiencies of 25%, and continuing costs of some 10%, that brings in a net earnings level of about 30%; an unheard of number. But, this is where VRNOF stock is right now. They are already printing some of these metrics. And, with an expansion of revenue this will merely improve metrics even more.
Given this, at $800M in revenue and a 30% net earnings, this brings in some $240M in net earnings. There are some 315M shares outstanding. EPS would be $0.762. With a forward multiple of 50x – 100x future earnings multiple this could put VRNOF stock at $40 – $75 per share.
But, the big caveat is that cannabis stocks are largely being overlooked right now. So, although valuations would normally push stocks to these levels, this simply is not the case right now. Still, this may be short-sightedness on the market’s part and the eventuality is that cannabis stocks will get there.
Playing the long game
Because of the continued frustration in cannabis right now I have been telling individuals to trust the process. For longterm investors, there is a big payoff awaiting. For, now, there is no popularity in marijuana stocks right now. Trust the process.
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