One-glance verdict
Undervalued
$4.21 our estimate vs market $1.39
Wall Street consensus: $3.22 (-23.5% lower than our fair-value estimate)
67% below our estimate, below the bear case
Fundamentals snapshot
SNDL Inc.
SNDL · NCM · Consumer Defensive · Beverages - Wineries & Distilleries
Current price
$1.39
52-week range
$1.13 - $2.34
Market cap
$340.24M
Balance sheet
Distressed
-0.59x Concerning
Net debt $20.85M. Interest coverage shows how many times profit covers the interest bill.
What stands out
2 Rewards
1 Risk
2 rewards · 1 risks
- Reward Revenue grew 2.8% last year.
- Reward Free cash flow was positive in 2/10 years.
- Risk Return on equity was -5.6% last year — the company lost money on shareholders' equity.
What this company does
SNDL Inc.
SNDL Inc. sells cannabis products and operates liquor stores, with most of its money coming from selling cannabis in Canada and through its retail stores. This matters because the cannabis market is growing, and the company is trying to make more money by selling both cannabis and alcohol.
How the company got here
SNDL Inc. wasn't always known by its current name. It was formerly Sundial Growers Inc., incorporated in 2006 and focused on cannabis production. The company underwent a significant transformation, especially after CEO Zachary George took the helm in 2020. Recognizing the challenges in the cannabis market, the company pivoted to become a more diversified holding company. This involved a series of strategic acquisitions and financings, expanding its reach beyond just growing cannabis into areas like liquor and cannabis retail, and even making strategic investments in the U.S. cannabis market. A key turning point was the acquisition of Alcanna Inc. in 2022, which significantly boosted its liquor retail presence.
What it actually does
SNDL Inc. is a company involved in both the production and sale of cannabis, as well as the retail of alcoholic beverages. Think of it as a company that grows and sells marijuana products, but also owns and operates liquor stores. This dual focus is a key part of its strategy to create a more stable business. The company operates across Canada and also has international dealings in the cannabis space. It offers a variety of cannabis products, including flower, pre-rolls, and vapes, under several different brand names.
Liquor Retail
This part of SNDL's business is all about selling alcoholic drinks. They operate a large number of liquor stores across Canada, particularly in Alberta, under well-known banners like Wine and Beyond, Ace Liquor, and Liquor Depot. These stores sell a variety of wines, beers, and spirits to customers. This segment is a significant revenue generator for SNDL, providing a more stable income stream compared to the often-volatile cannabis market. It's essentially a traditional retail business focused on alcoholic beverages.
Cannabis Retail
This segment involves the sale of cannabis products directly to consumers for recreational use. SNDL operates a network of corporate-owned, controlled, and franchised retail cannabis stores. These stores offer a range of cannabis products and accessories. Brands like Value Buds and Spiritleaf are part of this retail network. The strategy here focuses on prime store locations, a wide selection of products, and creating a good customer experience. This is where consumers can walk in and purchase cannabis products legally.
Cannabis Operations
This is the part of SNDL that actually grows, processes, and distributes cannabis. They cultivate cannabis in indoor facilities, focusing on producing high-quality flower, pre-rolls, and vapes. These products are then sold both in Canada and for export to international markets. This segment also includes offering proprietary cannabis processing services. It's the core of their cannabis production business, aiming to supply both their own retail stores and other markets.
Investments
Through its investment arm, SunStream Bancorp, SNDL strategically deploys capital into the cannabis industry, particularly in the U.S. market. This involves providing financial services, such as offering loans (debt) and taking equity stakes in other cannabis companies. The goal here is to generate income from interest payments and benefit from the potential growth (capital appreciation) of these invested companies. This segment allows SNDL to gain exposure to the U.S. cannabis market without directly operating dispensaries there, leveraging its financial expertise.
What management is betting on now
SNDL's management is focused on a strategy of diversification and financial discipline. They are leveraging their strong balance sheet, which includes substantial cash reserves and no corporate debt, to pursue opportunistic growth. This includes expanding their U.S. medical cannabis operations through strategic acquisitions and increasing their ownership in key ventures like Parallel. Management is also prioritizing operational efficiency and cost-reduction measures, especially within the cannabis operations segment, to improve profitability. The company aims to unlock value by trading at a discount to its net asset value, suggesting confidence in the underlying worth of its diverse business segments.
Price history
How the share price has moved
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Is it cheap or expensive?
Fair value $4.21 vs current price $1.39
Wall Street consensus is the average analyst price target: $3.22 (-23.5% lower than our fair-value estimate).
Our most-likely fair value is $4.21 a share — about 202.6% above today's price of $1.39, so the stock currently looks cheap (undervalued).
Is it drowning in debt?
Distressed
Net debt $20.9M. Interest coverage -0.6x.
Net debt
$20.85M
Interest coverage
-0.59x
SNDL Inc.'s profit covers its interest bill about 0.0 times over. which is weaker than most peers shown here and 5 peers sit below 1x, which is the danger zone where profit does not fully cover the interest bill.
Distressed
Worse cushion
Baseline
Better cushion
SNDL
BASELINE
SNDL Inc.
Total debt $114.38M Interest coverage -0.59x This is the baseline the peer rows are being compared against.
Total debt $371.93M Interest coverage -1.85x Neither company has much profit cushion over interest right now.
Total debt $173.25M Interest coverage -1.91x Neither company has much profit cushion over interest right now.
Total debt $15.98M Interest coverage -25.79x Neither company has much profit cushion over interest right now.
Total debt $1.21M Interest coverage -1,499.77x Neither company has much profit cushion over interest right now.
Total debt $22.31M Interest coverage -35.66x Neither company has much profit cushion over interest right now.
What you should know
The case for and against SNDL
2 Rewards
1 Risk
Rewards
-
Revenue grew 2.8% last year.
-
Free cash flow was positive in 2/10 years.
Risks
-
Return on equity was -5.6% last year — the company lost money on shareholders' equity.
The numbers
All the key metrics, grouped by purpose
Tap any ? icon to learn what it means.
Valuation
How expensive the stock looks
P/E (TTM)
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Forward P/E
46.33x
P/B
0.47x
P/S
0.37x
EV/EBITDA
-30.98x
PEG ratio
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Profitability
How much profit each dollar creates
Gross margin
25.7%
Operating margin
-1.4%
Net margin
-6.4%
ROE
-5.6%
ROA
-0.5%
Health
Liquidity and balance-sheet strength
Debt / equity
0.16x
Current ratio
3.92x
Quick ratio
2.03x
Total debt
$114.38M
Total cash
$93.52M
Growth
How the business has been compounding
Revenue TTM
$649.80M
Revenue 5Y CAGR
9.9%
EPS TTM
-0.17
EPS 5Y CAGR
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Cash flow
How much cash the business throws off
Operating CF TTM
$49.97M
Free CF TTM
$40.94M
FCF margin
6.3%
Dividend
Shareholder payout
Yield
0.0%
Payout ratio
0.0%
Last ex-div date
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