GDNP stock is good for a double, Beacon says

Its second quarter results are in the books and Beacon Securities analyst Ahmad Shaath still thinks there is money to be made on good natured Products (good natured Products Stock Quote, Chart, News, Analysts, Financials TSXV:GDNP).

On August 29, Good Natured reported its Q2, 2023 results. The company posted Adjusted EBITDA of $100,000 on revenue of $18.3-million, a topline that was down from $25.5-million in the same period last year.

“We keenly recognize the challenge for our business and stakeholders to cycle through reductions in quarterly revenue as we’ve navigated considerable macroeconomic volatility and supply chain normalization that we first identified in Q3 2022. Our outlook remains very positive about the continued strong growth in our packaging business group, and our robust pipeline continues to perform with several new packaging deals expected to enter commercial production in the back half of the third quarter,” CEO Paul Antoniadis said. “We also anticipate third party industrial sales to show signs of improving later this year and continue to pro-actively lower our SG&A spend through cost reduction initiatives, while we also look for ways to restructure and renegotiate our long-term debt.”

Shaath summarized the quarter, which he says exhibited cost disciple.

“good natured Products reported Q2/FY23 revenue of $18.3 MM, slightly ahead of our $18.0 MM forecast but below consensus $19.2 MM. Revenue trends were similar to Q1 performance, with continued weakness in the Industrial segment (down 55% y/y) masking the solid performance in the Packaging segment. Revenue
from Packaging was up 77% y/y due to the inclusion of Form-Tex (no contribution in Q2/FY22). More significantly, organic revenue growth in Packaging accelerated to >45% y/y (vs. ~20% y/y in Q1/FY23). Adjusted EBITDA was just above breakeven, inline with our forecasts but below consensus $0.3 MM. The company continued to deliver on its cost cutting measures, with G&A down 3% sequentially and inline with our forecasts. GDNP reported EPS (diluted) of -$0.02, below our forecast and consensus -$0.01.”

In a research update to clients August 30, Shaath maintained his “Speculative Buy” rating and one-year price target of $0.20 on GDNP, implying a return of 122 per cent at the time of publication.

The analyst thinks the company will post Adjusted EBITDA of $1.9-million on revenue of $78.1-million in fiscal 2023.

About Good Natured Products (via company handout)

Good Natured is passionately pursuing its goal of becoming North America’s leading Earth-friendly product company by offering the broadest assortment of plant-based products made from rapidly renewable resources instead of fossil fuels. The company is focused on making it easy and affordable for business owners and consumers to shift away from petroleum to better everyday products that use more renewable materials, less fossil fuel and no chemicals of concern.