Green Thumb Industries Stock: Undervalued U.S. Pot Stock Has 300%+ Upside

Green Thumb Industries Inc’s Outlook Is Bullish Despite Headwinds

Green Thumb Industries Inc (CNSX:GTII, OTCMKTS:GTBIF) is a great U.S. marijuana company whose share price has been dragged down by broad-based investor pessimism.

Although GTBIF stock has risen in the past month, it has tumbled over the past year. The sell-off seems overdone, especially when you consider that the company reports healthy financial results. Despite the tough macroeconomic environment, Green Thumb Industries Inc’s second-quarter and first-half revenue increased by double-digit percentages.

Green Thumb Industries Inc also reported its eighth consecutive quarter of positive net income. There aren’t many cannabis companies that are profitable, let alone consistently profitable.

For these good deeds, investors have pushed Green Thumb Industries stock:

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  • Up by six percent over the last month
  • Down by 20% over the last three months
  • Down by 48% over the last six months
  • Down by 56% year-to-date
  • Down by 70% year-over-year

Wall Street, however, sees big potential in this undervalued pot stock. Of the analysts providing a 12-month share-price target for GTBIF stock, their average estimate is $23.00 and their high estimate is $38.83. That translates to potential gains from Green Thumb Industries stock in the range of 141% to 307%.

Chart courtesy of StockCharts.com

GTBIF Stock Overview

Green Thumb Industries is a multistate cannabis consumer-packaged-goods company. With 17 manufacturing facilities and 77 open retail locations, it has operations in 15 U.S. states. (Source: “About Us,” Green Thumb Industries Inc, last accessed August 8, 2022.)

The company manufactures and distributes a portfolio of top-selling marijuana products, including “Good Green,” “Rhythm,” “Dogwalkers,” “incredibles,” “Beboe,” and “Dr. Solomon’s.”

Green Thumb Industries Inc also owns and operates a growing national chain of 67 stores called “Rise.” It has locations in 11 states and has been opening new stores every month. The company’s retail banners include “Essence,” “Bluepoint Wellness,” “Affinity,” and “Summit.”

Solid Second-Quarter Financial Results

For the second quarter ended June 30, Green Thumb Industries announced that its revenue increased by 4.8% sequentially and 14.6% year-over-year to $254.3 million. Its revenue for the first half of 2022 went up by 19.4% to $496.9 million. (Source: “Green Thumb Industries Reports Second Quarter 2022 Results,” Green Thumb Industries Inc, August 3, 2022.)

All 15 of the states that Green Thumb Industries operates in contributed to its second-quarter revenue: California, Colorado, Connecticut, Florida, Illinois, Maryland, Massachusetts, Minnesota, Nevada, New Jersey, New York, Ohio, Pennsylvania, Rhode Island, and Virginia.

Green Thumb Industries Inc’s gross profit in the second quarter of 2022 was $125.8 million, or 49.5% of its revenue, compared to $122.9 million, or 55.4% of its revenue, in the same period of 2021.

Its net income in the second quarter went up by 10.5% to $24.4 million, or $0.10 per share, compared to $22.1 million, or $0.10 per share, in the same prior-year period. This represents the company’s eighth consecutive quarter of profitability.

In the second quarter of 2022, Green Thumb Industries Inc’s earnings before interest, taxes, depreciation, and amortization (EBITDA) were $86.5 million, or 34.0% of its revenue. That’s compared to $65.9 million, or 29.7% of its revenue, in the second quarter of 2021.

The company ended the second quarter with $311.5 million in assets, including $145.3 million in cash and cash equivalents. Its total debt at the end of the quarter was $253.4 million.

Ben Kover—Green Thumb Industries Inc’s founder, chairman, and CEO—commented, “We are pleased with our second quarter results, especially in this challenging economic environment.” (Source: Ibid.)

He continued, “Five percent revenue growth and greater than 300 basis point improvement in Adjusted EBITDA margins over the previous quarter demonstrate the results of our focus. We continue to maintain a strong balance sheet, which gives us ample flexibility to support our growth initiatives.”

Analyst Take

Green Thumb Industries Inc is an excellent U.S. cannabis company with a solid balance sheet.

It continues to report profitable quarterly results, open new dispensaries, and launch new products. It has been basically doing everything you’d expect a successful multistate marijuana operator to do.

Unfortunately, Green Thumb Industries stock’s price hasn’t followed in step, but Wall Street analysts expect that to change over the coming quarters.