The rapid growth of the cannabis industry, fueled by advancing legalization efforts and a growing market, is accelerating the rise of companies like Green Thumb Industries (GTBIF), a multi-state company specializing in cannabis products. With discussions at the federal level about legalization, the rise in recreational use – which is legal in 24 states and growing, with Florida’s Amendment 3 putting the foot in play this November – is expected to spur significant growth and allow the green plants to thrive profitably.
The stock is up 60% in the past year and still has room to grow. For investors interested in cannabis stocks, this could be an attractive option.
The growing footprint of the Green Thumb
Green Thumb Industries is a leading national cannabis packaging products company and retailer. Its diverse portfolio includes branded cannabis products such as &Shine, Beboe, Dogwalkers, Doctor Solomon’s, Good Green, incredible and RYTHM. In addition, Green Thumb operates a rapidly growing cannabis retail network called RISE. The company operates in 14 U.S. markets and has 20 manufacturing facilities and 97 retail locations.
Recently, the Company has made significant progress in its business development. Two new RISE dispensaries opened in Florida during the second quarter. In addition, three additional RISE dispensaries opened in Florida and New York after the quarter ended, and the Company will begin legal sales at five RISE dispensaries in Ohio beginning August 6.
Green Thumb’s latest financial results
The company recently announced its second quarter financial results. Revenue of $280.15 million exceeded analyst expectations of $277.24 million and represented 11% year-over-year growth. This significant growth was driven by increased retail and consumer packaged goods sales, 11 additional RISE dispensaries, and recreational sales in Maryland. Gross profit for the quarter was $150.5 million, 53.7% of total revenue, representing 4.1% year-over-year growth.
Total expenses increased from $84.2 million in 2023 to $96.5 million in 2024 due to higher costs related to new openings and salaries. Net income was $20.7 million, up from $13.4 million last year. In addition, EBITDA for the quarter was $82.0 million, up 24.6% from $65.3 million in 2023. Earnings per share (EPS) of $0.09 beat analysts’ forecasts of $0.05.
At the end of the quarter, the company reported working capital of $403.8 million, including cash and cash equivalents of $196.1 million. Total debt was reported at $309.7 million.
What is the price target for GTBIF shares?
The stock is volatile, has a beta of 1.51, and has been range-bound since the beginning of the year. It is trading in the middle of its 52-week price range of $6.42 to $16.33 and is showing negative price momentum. It is trading below the 20-day (11.27) and 50-day (11.65) moving averages. With an EV/EBITDA of 7.39, the company is relatively undervalued compared to the Specialty and Generic Drug Manufacturers industry, where the average EV/EBITDA ratio is 13.77.
Analysts covering the company are bullish on the stock. For example, Needham analyst Matt McGinley recently reiterated his buy rating on the stock with a price target of $17.00, citing the company’s robust recent financial performance, the strength of its balance sheet, growing profitability and operational efficiency.
Overall, Green Thumb Industries is rated as a strong buy based on eight analysts’ recommendations and price targets. The average price target for GTBIF shares is $19.59, which represents a potential upside of 74.91% from current levels.
View more GTBIF analyst ratings
Final thoughts on green thumbs
With its significant presence in the emerging cannabis industry, Green Thumb Industries is well positioned to participate in the promising future of the cannabis market and its ongoing legalization in the U.S. The company has significant upside potential and the stock is trading at a relative discount, making it an attractive option for cannabis-focused investors.
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