Is Green Thumb Industries a buy? (May, 2024)

Its first quarter numbers are in the books and Beacon Securities analyst Russell Stanley is still bullish on Green Thumb Industries (Green Thumb Industries Stock Quote, Chart, News, Analysts, Financials CSE:GTII).

On May 8, GTII reported its Q1, 2024 results. The company posted Adjusted EBITDA of $91.0-million on revenue of $276.0-million, a topline that was up 11% over the same period a year prior.

“I am pleased that our team delivered an outstanding quarter with revenue over $275 million, Adjusted EBITDA over $90 million, and cash flow from operations over $80 million,” said CEO Ben Kovler. “We have the pieces in place to execute on our strategy to create award-winning brands and build customer loyalty. As we round out our tenth year as a company, we believe we have a clear vision, a healthy balance sheet and the best team in the business to execute the next decade of the Green Thumb story.”

Stanley says this quarter was a beat in all key metrics.

“Wednesday after the close, GTII reported Q1 revenue/adjusted EBITDA of $276M/$91M, beating our forecast of $265M/$75M, consensus at $269M/$81M, and approaching the street-high estimates at $280M/$92M,” he noted. “Revenue was 4% ahead of our forecast, holding relatively steady against Q4 levels despite an expected seasonal dip, and improving 11% y/y. Gross margins were 253 bps ahead of our forecast, improving 126 bps q/q and 237 bps y/y. OPEX margins were also better/lower than expected in Q1, supporting adjusted EBITDA margins that were 453 bps stronger than expected, while up 20 bps q/q and 216 bps y/y. Management reiterated its target for adjusted EBITDA margins of 30%, while also reiterating that it is less concerned with the components, implying some flexibility on gross margins.”

In a research update to clients May 9, Stanley maintained his “Buy” rating and price target of $23.00 on GTII, implying a return of 30% at the time of publication.

The analyst thinks GTII will post Adjusted EBITDA of $356-million on revenue of $1.13-billion in fiscal 2024. He expects those numbers will improve to EBITDA of $373-million on a topline of $1.22-billion in fiscal 2025.