OrganiGram Stock Soars on the Back of a Strong Financial Report

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OrganiGram Stock

One of the marijuana stocks that I’ve long championed, OrganiGram Holdings Inc (OTCMKTS:OGRMF, CVE:OGI), has been making me look good this past week. OrganiGram stock has gained about 14% following a very strong financial earnings report.

OrganiGram’s Q3 financial report was released on July 30. Since then, the company has been on an upward journey.

Some of the highlights of the report include record net sales for both the quarter and the nine-month period compared to last year, more than doubling the previous year’s numbers.

Quarterly net sales hit CA$3.7 million, compared to CA$1.9 million for the same period in 2017. Meanwhile, the nine-month net sales came in at CA$10.1 million, compared to CA$3.6 million in  the same period in the previous year. (Source: “Organigram Announces Record Q3 Financial Results – Net Income of $2.8 Million for the Quarter,” OrganiGram Holdings Inc, July 30, 2018.)

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Cannabis oil sales numbers were similarly fantastic, jumping by 39% from Q2 and 452% from last year.

Chart courtesy of StockCharts.com

One of the most important numbers to note long-term, however, is the cost of cultivation per gram. This will help the company maintain competitiveness as it peddles its wares in the crowded marijuana marketplace. The company hit CA$0.80 per gram, which is a strong number in the legal cannabis industry.

OrganiGram stock was also the beneficiary of an influx of patients, gaining 18% since Q2 to bring the total to 15,316.

Some of the softer highlights of the financial report include the harvesting statistics from the company’s Phase 2 expansion facility, bringing its target production of dried flower to 22,000 kilograms a year.

The company also noted that it made its first international medical shipment to Australia in July.

Another point of note: the company’s press release stated that OrganiGram “is confident it will be able to announce further provincial agreements in the adult recreational market in the current quarter.” (Source: OrganiGram Holdings Inc, op cit.)

Be on the lookout for news of that nature to keep the OrganiGram stock party going.

OrganiGram’s Financial Statistics

OrganiGram stock’s financials, listed in the table below, show a company that is growing, with strong sales increases and solid fundamentals that can help the company stay in the black.

All figures are in thousands, except earnings per share.

Three Months Ended May 31

Increase

Nine Months Ended May 31

Increase

2018

2017

2018

2017

Gross Sales

$3,705

$1,917

93%

$9,612

$5,593

72%

Sales Recovery

$21

Not Meaningful

$490

-$2,026

Not Meaningful

Net Sales

$3,726

$1,917

94%

$10,102

$3,567

183%

Cost of Sales (Including Indirect Production)

$1,671

$2,097

-20%

$5,012

$5,905

-15%

Gross Margin (Excluding Fair Value Adjustment)

$2,055

-$180

Not Meaningful

$5,090

-$2,338

Not Meaningful

Fair Value Adjustment on Bio Assets & Inventories

$10,066

-$578

Not Meaningful

$15,172

-$1,634

Not Meaningful

Gross Margin

$12,121

-$758

Not Meaningful

$20,262

-$3,972

Not Meaningful

General & Administration

$1,556

$ 790

97%

$4,743

$2,245

111%

Sales & Marketing

$1,754

$691

154%

$ 4,033

$2,063

95%

Share-based Compensation (Non-Cash)

$1,156

$222

421%

$3,056

$787

288%

Impairment of Goodwill

$1,156

Not Meaningful

$1,156

Not Meaningful

Net Financing Costs (Income)

$3,679

-$115

Not Meaningful

$4,778

-$211

Not Meaningful

Net Income

$2,820

-$2,346

Not Meaningful

$2,496

-$8,856

Earnings Per Share

$0.023

-$0.023

Not Meaningful

$0.021

-$0.093

Not Meaningful

Diluted Earnings Per Share

$0.021

-$0.023

Not Meaningful

$0.019

-$0.093

Not Meaningful

Dried Cannabis Flower Sold

303,428 g

196,129 g

55%

736,153 g

598,060 g

23%

Cannabis Oil Sold

768,400 ml

189,600 ml

305%

1,739,250 ml

406,000 ml

328%

(Source: OrganiGram Holdings Inc, op cit.)

Analyst Take

These are very strong numbers from a very strong company.

OrganiGram Holdings small and nimble. But unlike many other companies in the legal marijuana industry, it is not as highly valued.

As such, OrganiGram stock has escaped many of the accusations of overvaluation that have circulated in the pot market.