The best part of the story is that Trulieve has entered into three additional state markets. The company has an avenue for growth beyond Florida with a store in both California and Connecticut and plans to enter Massachusetts.
The stock has a market cap of $1.2 billion and a reasonable path to achieve the 2020 EBITDA target of $150 million. A normal stock generating 50% EBITDA growth over the ~$100 million target in 2019 would normally trade at substantially higher multiples than 8x estimates. Even a doubling of the stock wouldn’t bring the valuation multiple above the norms for 50% EBITDA growth.
In addition, the EBITDA margin is expected to dip initially as Trulieve looks to expand beyond the well-established Florida market. The company forecasts a 500-basis point hit to margins in 2020 from the peak level at 43.5% in 2019.
For Q1 reported at the end of May, Trulieve reported impressive 192% revenue growth. The company reached quarterly revenues of $44.5 million and more importantly produced a positive adjusted EBITDA of $19.0 million.
The multi-state operator (MSO) hasn’t made aggressive acquisitions or wild moves into other states leaving a focus on Florida to generate solid margins. Trulieve recently opened the 30th dispensary in the state.
With a focus on Florida, Trulieve achieved Q1 gross margins of 67%. The ability to control operating expenses by not having wild expansion plans into 10 to 15 states has allowed for limited operating expenses of $11.9 million. The company only spends about 27% of revenue on operating expenses which opens up the door for large profits in a growth mode. SOURCE Smarter analysis
AVERAGE ANALYSTS PRICE TARGET $30
AVERAGE ANALYSTS RECOMMENDATION BUY
P/E RATIO 20
COMPANY PROFILE
Trulieve Cannabis Corp. engages in the provision of medical cannabis products. The firm cultivates and produces its products in-house and distributes to its branded stores, as well as directly to patients via home delivery. Its products include smokable flower, inhalation, oral, sublingual, topical, inter-nasal, and concentrates. The company was founded on September 21, 2018 and is headquartered in Quincy, FL.
The stock has a market cap of $1.2 billion and a reasonable path to achieve the 2020 EBITDA target of $150 million. A normal stock generating 50% EBITDA growth over the ~$100 million target in 2019 would normally trade at substantially higher multiples than 8x estimates. Even a doubling of the stock wouldn’t bring the valuation multiple above the norms for 50% EBITDA growth.
In addition, the EBITDA margin is expected to dip initially as Trulieve looks to expand beyond the well-established Florida market. The company forecasts a 500-basis point hit to margins in 2020 from the peak level at 43.5% in 2019.
For Q1 reported at the end of May, Trulieve reported impressive 192% revenue growth. The company reached quarterly revenues of $44.5 million and more importantly produced a positive adjusted EBITDA of $19.0 million.
The multi-state operator (MSO) hasn’t made aggressive acquisitions or wild moves into other states leaving a focus on Florida to generate solid margins. Trulieve recently opened the 30th dispensary in the state.
With a focus on Florida, Trulieve achieved Q1 gross margins of 67%. The ability to control operating expenses by not having wild expansion plans into 10 to 15 states has allowed for limited operating expenses of $11.9 million. The company only spends about 27% of revenue on operating expenses which opens up the door for large profits in a growth mode. SOURCE Smarter analysis
AVERAGE ANALYSTS PRICE TARGET $30
AVERAGE ANALYSTS RECOMMENDATION BUY
P/E RATIO 20
COMPANY PROFILE
Trulieve Cannabis Corp. engages in the provision of medical cannabis products. The firm cultivates and produces its products in-house and distributes to its branded stores, as well as directly to patients via home delivery. Its products include smokable flower, inhalation, oral, sublingual, topical, inter-nasal, and concentrates. The company was founded on September 21, 2018 and is headquartered in Quincy, FL.
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Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.