Vibe Growth VIBEF Stock Forecast & Analysis

Vibe Growth, VIBEF stock, is a vertically integrated California-based grow & dispensary.^[1]VibeByCalifornia  They are in the same neighborhood as Lowell Farms with some excellent grow conditions for cannabis.  There is some growth revenue potential, but analyst projections appear to be somewhat subdued for Vibe Growth versus the broader industry.  Revenue growth rates are slightly lower than the 25% average being seen by the overall industry.  The past few quarters show that revenue has fallen and remains stagnant.

Given the revenue outlook, margins are decent and operating efficiencies are close to average.  Vibe Growth is a company that could put things together.  But, they need to grow their revenues.

Vibe Growth Financial Data

Vibe Growth Gross Profits

Despite a shrinking revenue stream, gross profits improved over the past quarter, translating into improving gross margins.  With dispensaries, you want to see continued increases in revenue.  This is driven by organic growth.  The year-over-year increases in growth at the same store show customer retention and loyalty.  This is one of the most important goals for a company.  With high retention and loyalty, sales costs are reduced from not having to spend more and more money to bring in customers.

The future revenue projections do not really push the envelope too far with growth here.  I have not found too many analysts who have put together too much regarding very high growth rates.  But, this would be what is necessary for future profits.  Regardless, margin levels are competitive.  If more money would flow through the same dispensaries, there is a solid opportunity for increasing margin levels with that trickling through to the bottom line.

Vibe Growth Operating Profits

One area that Vibe Growth does somewhat solid here.  A company – especially a publicly traded company – has certain jobs that are filled regardless.  On a relative basis, relative to revenue, you want to see companies maintain cost control vigilance here.  But, as revenues increase, increasing costs here is warranted.

Mostly, what I have found is that operating costs for cannabis companies are hitting approximately 30% – 35% versus revenue – operating efficiencies & operating profits.  But, the broader market, via CSIMarket.com^[2]csimarket.com show that the more mature companies are printing about 15% – 20%.  When you compare cannabis companies to these bigger companies, there is room for development.  This makes sense considering where cannabis companies are relative to the bigger players.

To me, that potential increase is what is important for cannabis investors.  As these companies grow, they are going to grow into their costs at the same time.  The non-savvy investor would look at operating profits for Vibe Growth being negative as a negative.  I see this as the opportunity once Vibe Growth starts to see its revenues increase.

Vibe Growth EBITDA & Net Profits

Single-digit EBITDA/Revenue numbers are a bit too low comparatively for a cannabis stock.  Gross margins need to continue improving.  And, revenues need to find a way to head back upward so that operating profits turn positive.  This is what will be necessary for Vibe Growth to hit an EBITDA level that is at first in the double-digits.  Then, hitting above the 22.5% to be as competitive as the broader market is what is next.

Then, Vibe Growth would be able to build its profits upward to a point where they can print positive net profits; the ultimate goal.  The lack of improvement in revenue is what is holding back Vibe Growth at this stage.

Vibe Growth Cash On Hand

On a relative basis, Vibe Growth has a fairly low debt load and ample cash.  Cash is oxygen and this gives a company that is not profitable the working capital to maintain operations.  Not being too heavily indebted is also a plus for any company.  Here, I think is where Vibe Growth has a solid opportunity to see its fortunes really turn upward.  If revenues are to start to increase, with solid organic growth, the fact that Vibe Growth is well capitalized is something that is potentially a big opportunity.

Vibe Growth Total Equity

As I just mentioned, Vibe Growth is actually well-capitalized.  They have a low debt load.  And, they have ample cash on hand.  If assets could increase, and revenues follow suit, there could be an opportunity here.  But, I am a bit dismayed with the decrease in revenue seen the previous three quarters.  However, that could turn upward with changes made by the Governor of California.

For now, Vibe Growth is well positioned here with total equity.  I would just want to see this increasing.

Vibe Growth VIBEF Stock Forecast

Vibe Growth VIBEF Stock DCF

I kept the growth rates somewhat subdued with this DCF.  At the same time, I looked at margins and kept them modest.  Vibe still has some growth in these areas.  More dispensaries are not necessarily going to turn revenues upward in an efficient manner.  But, organic growth is what is going to really get margins to better levels.  I will continually update these numbers.

Is Vibe Growth VIBEF Stock A Good Investment?

Very likely, Vibe Growth will shoot upward with all other cannabis stocks.  For now, it is a low flyer.  I have been wondering on any moves upward with cannabis stocks and how potentially there could be big increases, how this plays with the smaller stocks.  Many of these smaller cannabis stocks may be overlooked simply because investors do not know they exist.

Regardless, if there are moves upward with cannabis stocks, Vibe may benefit.  In the long run, if there is an increase in revenue, this could start to turn the financials upward and Vibe may be a solid investment on its own.

But, at the same time, a smaller company like this makes me think that strategic mergers may also be a beneficial move for Vibe Growth.  We will be seeing a lot of these kinds of moves.  This may be what is necessary for some companies to get over that next hurdle.  Maybe a Gaby or other company in the same size category would be a solid opportunity.

Vibe Growth Financial Data

Vibe Growth VIBEF Stock Financial Data