One-glance verdict
Undervalued
$2.93 our estimate vs market $1.40
Wall Street consensus: $3.49 (19.2% higher than our fair-value estimate)
52% below our estimate, below the bear case
Fundamentals snapshot
SNDL Inc.
SNDL · NCM · Consumer Defensive · Beverages - Wineries & Distilleries
Current price
$1.40
52-week range
$1.17 - $2.89
Market cap
$344.57M
Balance sheet
Healthy
-0.59x Concerning
Net cash $12.19M. 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 -2.0% last year — the company lost money on shareholders' equity.
What this company does
SNDL Inc.
SNDL is a Canadian company that sells cannabis products and also owns a large chain of liquor and cannabis retail stores. The company now makes most of its money from these retail stores, which is a big shift from its original business of just growing and selling cannabis. This matters because owning the stores provides a more consistent source of revenue (the total money a company brings in from sales) compared to the very competitive business of cannabis cultivation.
How the company got here
Originally founded in 2006 and once known as Sundial Growers, the company focused primarily on growing and selling cannabis. After facing significant financial struggles and nearly going bankrupt in 2020, a new leadership team shifted the company's direction. They changed the name to SNDL Inc. in 2022 and aggressively expanded into selling liquor and cannabis through retail stores, becoming Canada's largest private seller of both. This major pivot involved acquiring established liquor store chains and cannabis retailers to build a much larger and more diverse business.
What it actually does
SNDL is a Canadian company that operates in both the alcoholic beverage and cannabis industries. You would most likely encounter SNDL by shopping in one of their many liquor stores, like Wine and Beyond, Ace Liquor, or Liquor Depot. They also own a large network of cannabis stores, such as Value Buds and Spiritleaf, that sell a wide variety of cannabis products. Behind the scenes, the company also cultivates its own cannabis and creates its own brands of products, like Top Leaf and Palmetto, which are sold in its stores and to other retailers.
Liquor Retail
This is SNDL's largest business segment, making it the biggest private seller of liquor in Canada. It operates a large number of physical stores under well-known names like Wine and Beyond, Ace Liquor, and Liquor Depot. Customers walk into these stores and buy beer, wine, and spirits, which is how this segment generates money. This part of the company provides a steady, mainstream retail business that balances the newer cannabis operations.
Cannabis Retail
This segment is one of the largest cannabis retailers in Canada, operating a network of corporate-owned and franchised (independently owned but using the company's brand and model) stores. You would recognize these stores under names like Value Buds and Spiritleaf. This part of the business makes money by selling cannabis products and accessories directly to adult consumers. The large number of stores gives SNDL valuable data and insights into customer preferences, which helps them manage their overall cannabis strategy.
Cannabis Operations
This is the part of the company that actually grows, processes, and packages cannabis. They create a wide range of products, from dried flower to vapes and edibles, under various brand names like Top Leaf, Versus, and Grasslands. This segment makes money by selling these branded products to provincial distributors, which then sell them to retail stores across Canada, including SNDL's own stores. This is a key part of their vertical integration (a strategy where a company controls multiple stages of its production and distribution), allowing them to supply their own retail network.
Investments
This is a smaller but important part of SNDL's business where the company uses its cash to invest in other cannabis-related opportunities. Instead of selling a physical product, this segment makes money by providing capital (money for investment) to other companies through loans or partnerships, aiming to earn a return on those investments. This allows SNDL to have a financial stake in the broader North American cannabis industry without directly operating all the businesses themselves.
What management is betting on now
The company's leadership is focused on achieving consistent profitability (making more money than it spends) and generating positive free cash flow (the cash left over after paying for operating expenses and capital expenditures, which are investments in physical assets like buildings and equipment). They are doing this by expanding their retail footprint through strategic acquisitions of more liquor and cannabis stores. Management is also focused on vertical integration, meaning they want to sell more of the cannabis they grow in their own retail stores to better control costs and product availability. Finally, they plan to use their strong balance sheet (a snapshot of a company's financial health) with no debt to take advantage of growth opportunities as they arise.
Price history
How the share price has moved
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Is it cheap or expensive?
Fair value $2.93 vs current price $1.40
Wall Street consensus is the average analyst price target: $3.49 (19.2% higher than our fair-value estimate).
Our most-likely fair value is $2.93 a share — about 109.0% above today's price of $1.40, so the stock currently looks cheap (undervalued).
Is it drowning in debt?
Healthy
Net cash $12.2M - more cash than debt. Interest coverage -0.6x.
Net debt
$-12.19M
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.
Healthy
Worse cushion
Baseline
Better cushion
SNDL
BASELINE
SNDL Inc.
Total debt $117.66M Interest coverage -0.59x This is the baseline the peer rows are being compared against.
Total debt $398.40M Interest coverage -1.85x Neither company has much profit cushion over interest right now.
Total debt $196.12M Interest coverage -1.91x Neither company has much profit cushion over interest right now.
Total debt $16.04M Interest coverage -25.79x Neither company has much profit cushion over interest right now.
Total debt $1.29M Interest coverage -1,499.77x Neither company has much profit cushion over interest right now.
Total debt $22.38M 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 -2.0% 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
46.67x
P/B
0.46x
P/S
0.37x
EV/EBITDA
-35.28x
PEG ratio
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Profitability
How much profit each dollar creates
Gross margin
26.2%
Operating margin
-2.3%
Net margin
-2.3%
ROE
-2.0%
ROA
-0.8%
Health
Liquidity and balance-sheet strength
Debt / equity
0.16x
Current ratio
4.76x
Quick ratio
2.67x
Total debt
$117.66M
Total cash
$129.84M
Growth
How the business has been compounding
Revenue TTM
$656.52M
Revenue 5Y CAGR
9.9%
EPS TTM
-0.06
EPS 5Y CAGR
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Cash flow
How much cash the business throws off
Operating CF TTM
$50.15M
Free CF TTM
$41.09M
FCF margin
6.3%
Dividend
Shareholder payout
Yield
—
Payout ratio
0.0%
Last ex-div date
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