West Island Brands WIBFF stock Forecast & Analysis

West Island Brands, WIBFF stock, is an up-and-comer that I wanted to put together the WIBEF stock forecast & analysis.  First, this company changed its name and symbol recently and, finding it may be a small challenge (They were Matica MMJFF stock).  The one thing that stands out for me is the increase in income for the quarter which printed USD$1M versus the $500K the previous month.  West Island Brands is currently in a phase of scaling things up and, given the pace they may be sitting at, solid things could occur.  This will drive WIBEF stock.

While there is an investment document for West Island Brands on its website, it is short on pages, long on potential, and misses out on financial information.  In fact, the investment prospectus is 3 years old and still has the Matica name on it.

Moving through press releases, however, you can find where the pace is picking up for West Island Brands and what could potentially drive WIBEF stock moving forward.  I do not necessarily fault West Island Brands for these things as much as I am informing you where you will get the best information on potentially investing in WIBEF stock.

West Island Brands: Quebec and beyond

Predominantly based in the Province of Quebec, this positions West Island Brands in an interesting spot.  Quebec has an interesting law in that any cannabis sold within the province must be grown & processed in the province.  But, I am pretty certain that any company within the province can export their respective products out of Quebec into the other 12 provinces in Canada.

So, basing yourself within Quebec would make for more sense as a cannabis company.  Nonetheless, Quebec is the second biggest province in Canada and, any cannabis company wanting to capture as much market share as they could would want to address this issue in some way or another.

That being said, at the time of this writing, West Island Brands market capitalization is all of USD$2.2M.  So, any Canadian cannabis company wanting to be in all 13 provinces may want to consider teaming up with West Island Brands, if not acquiring the company outright; there will be tremendous M&A activity throughout time and this is something that is a high likelihood.

West Island Brands Product s

Along with flower & edibles, there is an interesting product that West Island Brands has that “solves” a problem.  They have a misting product to rid the odor of cannabis smoke.  Interesting.  But, and as you all know, I do not consume cannabis.  However, I have been around enough cannabis to know that it is not much of an issue to me.  In fact, I prefer it far more than to regular cigarette smoke.

But, these kinds of things are not something I look for as an investment.  This may be a unique product.  My opinion of that product is irrelevant, however.  Instead, I only consider what that masses are considering if this is a solid product or not.

I consume financial data and I rely upon a concept called “dollar votes” where if enough consumers are buying any one particular product, there is continuous increasing revenue.  All of the masses are basically saying that this would be a viable product mix.  To reiterate, revenue multiplied by 2x for the quarter.

West Island Brands Book Value

Here is something that caught my eye that I thought I would bring up as it is an interesting metric.  Just Tuesday, I reviewed Body & Mind  BMMJ stock.  Body & Mind has assets of some $30M.  But, market capitalization is all of $11M at the time of the writing.  This means you could pick up the entire company at a significant discount to its assets – it is losing money but, I expect that to be a short-term issue.

West Island Brands has a market cap of the $2.2M that I mentioned.  They have cash of about $200K and total equity of about $3.3M.  So, there is a book ratio there that if you compared the two stocks, BMMJ stock versus WIBEF stock, you get something different and that tells us something.

The ratio for Body & Mind, total equity to market capitalization is $11:$30 and WIBEF stock is at $2.2:$3.3.  From a book ratio, on an undervalued perspective, Body & Mind is the better investment.  I feel as if Body & Mind will likely get there a little more optimally than West Island Brands, but that is not a dead certainty.  It may be that both stocks gain profitability simultaneously.  However, if you were to consider book value alone, Body & Mind has a better undervalued ratio.  I thought that was interesting.

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West Island Brands Financial Data

Here is a breakdown of the latest financial release for West Island Brands.

West Island Brands Gross Profits

  • West Island Brands Revenue

Despite the impressive increase in revenue for the quarter, more needs to happen.  That is likely going to show up as distribution of products throughout Quebec are taking place.  I am looking for solid total revenue increases in the next three quarters of this year and I expect we should hit about $5M total revenue for the year.

Then, as West Island Brands continues to expand outward, revenue will continue to increase.  This will have the necessary scaling effect of building up the business.  With more products moving through the grow facilities & processing facilities, this will translate into fixed costs being spread out over more and more products.

Marginal profits will continually increase.  And, that will have the added effect of increasing total gross margins.   On higher total revenue, we should start to see solid gross margins.  For now, West Island Brands needs to continue the work they have accomplished.  Eventually, WIBEF stock will respond and move upward.

West Island Brands Operating Profits

  • West Island Brands Oeprating Costs

Total operating costs remain fairly constant.  Sometimes with these smaller cannabis companies, you see jumps up and down.  And, since operating efficiencies is a mathematical ratio of total operating costs divided over total divided over total revenue, if total operating costs can remain fairly constant while revenues climb, operating efficiencies will continue to improve.

Remember, because this is a cost ratio, you want the lowest possible number.  Given that, the number should move downward.  The best cannabis companies are printing roughly between 30% and 35%.  Just at 50%, West Island Brands is within the wheelhouse.

Then, just like other companies, West Island Brands is going to want to continually build its revenues upward, while containing costs, and drive operating efficiencies downward to between 15% – 20% like the bigger companies on the bigger exchanges.

West Island Brands EBITDA & Net Profits

  • West Island Brands EBITDA

I think West Island Brands has a pretty solid chance at hitting EBITDA positive levels that will help them balance out the net earnings losses.  My expectations are continued increases upward in revenue and, that will help the bottom line improve.

Look for the revenue increases to improve the EBITDA/Revenue levels and then eventually start to get closer to break-even with net earnings.

West Island Brands Cash On Hand

  • West Island Brands Cash on Hand

There is a small amount of cash on hand at the moment.  Fortunately, the last burn rate is lower than the cash level is at this moment.  And, I expect that West Island Brands will likely achieve a higher level of EBITDA/Revenue by the end of this year.  Therefore, this will measure out somewhat.  West Island Brands is going to have to raise a little cash at some point, however.

West Island Brands Total Equity

  • West Island Brands Total Assets

Looking at book value was something that was interesting to me.  Only because I had just done another smaller company two days prior did this really stick out to me.  But, West Island Brands is trading below book value.  Total equity is about $3M.  Market capitalization is at $2M.  The downside is limited.  That is not to say that the stock cannot go lower; it is already trading below book value.

In the meantime, total equity continues to dwindle.  And, until West Island Brands is able to achieve net earnings profitability, having to borrow against total assets will accumulate more debt.  That will dwindle total equity a bit more.

As I said above, the cash burn rate is very likely to slow down moving forward and so will total equity moving lower and lower.

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West Island Brands WIBFF Stock Forecast

West Island Brands DCF

I took a moderate path with West Island Brands when looking at the numbers here.  It was difficult to create projections since there really is no guidance.  Nor is there any analyst numbers I could use to figure out what might be a possibility for revenue in the next two years.  This made putting together the WIBFF stock forecast a bit interesting.

Nonetheless, I think West Island Brands is close enough to profitability and that they can pull this off soon that putting together the WIBFF stock forecast would likely be close to accurate.

I used about $5M as the projection for this year.  Given the most recent increase in revenue for Q1 to $1M, I think hitting $5M will be achievable over the next 3 quarters.  And, with that, a likely $1.25M – $1.5M in revenue per quarter over the last three quarters, margins will improve.  Then, the following year, there will be even more improvements.

Is West Island Brands WIBFF Stock A Good Investment?

West Island Brands WIBFF stock Forecast & Analysis Chart

Is West Island Brands WIBFF stock a good investment?  This all depends on your angle.  First, and as I mentioned in my video as well, above, the ratio is not favorable for West Island Brand versus another stock I just covered.  But, that should not necessarily deter anyone from an investment into West Island Brands WIBFF stock.  The price is low enough that many shares can be picked up at a low rate.  At $0.13 per share as a last at the time of this writing, that is a low stock price.

Still, the book value makes the downside risk very limited.  Another company will very likely come in and pick up this stock at a much higher price simply because of the total assets versus market capitalization.

Also, I do not see a big deal of downside risk here from a business side.  As the company builds up its revenues, margins will improve.  And, the eventuality is that WIBFF stock will start to move higher.

Also, there is the M&A aspects I have talked about.  This is a stock that since it is in Quebec may be a target of sorts.  That alone is an opportunity.  Given the fact that eventually, West Island Brands is likely to become profitable, with the continued increase in revenue, this alone is an opportunity.  And, with the M&A possibility, again, there is upside opportunity.  This is one of the benefits of getting involved in a stock that is as small as they are with a price as low as it is.  This is the opportunity with penny stocks that is available with cannabis investing.

West Island Brands Financial Data

West Island Brands MMJFF Stock Financial Data

 

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