One-glance verdict
Undervalued
$4.72 our estimate vs market $0.09
98% below our estimate, below the bear case
Fundamentals snapshot
22nd Century Group, Inc.
XXII · NCM · Consumer Defensive · Tobacco
Current price
$0.09
52-week range
$0.09 - $540.00
Market cap
$1.82M
Balance sheet
Healthy
-7.85x Concerning
Net cash $4.31M. Interest coverage shows how many times profit covers the interest bill.
What stands out
2 Rewards
3 Risks
2 rewards · 3 risks
- Reward Free cash flow was positive in 1/10 years.
- Reward Trades at 0.0x P/E vs peer median 4.3x (100.0% cheaper).
- Risk Operating margin compressed from -83.9% to -247.8% over 3 years.
- Risk Return on equity was -105.7% last year — the company lost money on shareholders' equity.
What this company does
22nd Century Group, Inc.
22nd Century Group makes and sells special cigarettes with much lower nicotine levels, trying to help people who smoke use less of this addictive substance. Most of their money comes from selling these reduced-nicotine cigarettes, and a smaller part comes from making regular cigarettes and cigars for other companies, which is like being a factory for hire. This matters because they are trying to be a leader in a new part of the tobacco market that focuses on health, rather than just selling traditional products.
How the company got here
Founded in 1998, 22nd Century Group began with a focus on plant biotechnology, aiming to alter the nicotine levels in tobacco plants through genetic engineering and breeding. The company's early vision was to revolutionize the tobacco industry by offering products with significantly reduced nicotine content, a move that could potentially address public health concerns related to nicotine addiction. Over the years, 22nd Century Group has navigated the complex regulatory landscape of the tobacco industry, securing patents and developing proprietary technologies to support its reduced-nicotine product development. This journey has involved strategic shifts, including a move towards a branded products business model while also maintaining contract manufacturing services for other tobacco brands.
What it actually does
22nd Century Group is a tobacco company that specializes in developing and selling tobacco products with significantly reduced nicotine content. Their core innovation lies in proprietary plant technology that allows them to grow tobacco plants with up to 95% less nicotine than traditional varieties. The company's main goal is to offer adult smokers an alternative that helps them control their nicotine consumption, positioning itself as a leader in tobacco harm reduction. Beyond their own branded products, they also offer contract manufacturing services to other tobacco brands.
Reduced Nicotine Content Tobacco Products
This is the company's flagship business line, focused on its proprietary reduced-nicotine tobacco. They manufacture and distribute combustible cigarette products, most notably their VLN® (Very Low Nicotine) brand, which contains 95% less nicotine than traditional cigarettes. These products are designed for adult smokers who wish to reduce their nicotine intake without necessarily quitting smoking altogether. The company has received authorization from the U.S. Food and Drug Administration (FDA) for these reduced-nicotine cigarettes, positioning them as a unique offering in the market. This segment is central to their strategy of tobacco harm reduction and aims to capture a significant share of the U.S. combustible cigarette market.
Contract Manufacturing Services
In addition to its own branded reduced-nicotine products, 22nd Century Group also operates a contract manufacturing segment. In this business, the company produces conventional combustible tobacco products, such as cigarettes and filtered cigars, for third-party brands. This segment provides a revenue stream by leveraging their manufacturing capabilities and expertise to serve established tobacco brands. While this has been a part of their business, the company is strategically shifting focus towards its higher-margin proprietary reduced-nicotine products.
What management is betting on now
Management is betting on a strategic transformation towards a branded, higher-margin business centered on their reduced-nicotine products, particularly the VLN® brand. Key priorities include expanding the distribution of these proprietary products into more retail locations and increasing consumer awareness. They are also focused on improving their gross margin (the profit left after accounting for the direct costs of making a product) by shifting away from lower-margin contract manufacturing. The company aims to achieve profitable growth by focusing on differentiated offerings and strengthening their commercial execution, all while continuing to innovate in plant biotechnology for tobacco harm reduction.
Price history
How the share price has moved
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Earnings history
Last 8 quarters — what happened
Click any quarter to read the call summary and what the numbers say.
FY2024 Q3
$-3.05M
FY2024 Q4
$-4.40M
FY2025 Q1
$-2.99M
FY2025 Q2
$-3.51M
FY2025 Q3
$-4.02M
FY2025 Q4
$2.73M
FY2026 Q1
$-3.14M
FY2026 Q2
$-4.32M
Revenue
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Net income
$-3.35M
Diluted EPS
-104.00
Operating cash flow
$-3.99M
Free cash flow
$-4.32M
Fetching…
Sources
Revenue
—
Net income
$-3.26M
Diluted EPS
-18.08
Operating cash flow
$-3.10M
Free cash flow
$-3.14M
Fetching…
Sources
Revenue
—
Net income
$-2.81M
Diluted EPS
-36.48
Operating cash flow
$2.75M
Free cash flow
$2.73M
Fetching…
Sources
Revenue
—
Net income
$5.49M
Diluted EPS
-0.28
Operating cash flow
$-4.02M
Free cash flow
$-4.02M
Fetching…
Sources
Revenue
—
Net income
$-3.41M
Diluted EPS
-13.61
Operating cash flow
$-3.48M
Free cash flow
$-3.51M
Fetching…
Sources
Revenue
—
Net income
$-4.33M
Diluted EPS
-2.50
Operating cash flow
$-2.98M
Free cash flow
$-2.99M
Fetching…
Sources
Revenue
—
Net income
$-4.56M
Diluted EPS
-172.29
Operating cash flow
$-4.40M
Free cash flow
$-4.40M
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Sources
Revenue
$5.95M
Net income
$-3.76M
Diluted EPS
-0.55
Operating cash flow
$-2.98M
Free cash flow
$-3.05M
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Sources
Is it cheap or expensive?
Fair value $4.72 vs current price $0.09
Our most-likely fair value is $4.72 a share — about 4,889.5% above today's price of $0.09, so the stock currently looks cheap (undervalued).
Is it drowning in debt?
Healthy
Net cash $4.3M - more cash than debt. Interest coverage -7.8x.
Net debt
$-4.31M
Interest coverage
-7.85x
22nd Century Group, Inc.'s profit covers its interest bill about 0.0 times over. which is weaker than most peers shown here and 4 peers sit below 1x, which is the danger zone where profit does not fully cover the interest bill.
Healthy
Worse cushion
Baseline
Better cushion
XXII
BASELINE
22nd Century Group, Inc.
Total debt $1.75M Interest coverage -7.85x This is the baseline the peer rows are being compared against.
Total debt $13.72M Interest coverage -30.99x Neither company has much profit cushion over interest right now.
Total debt $4.03M Interest coverage -12.35x Neither company has much profit cushion over interest right now.
Total debt $391.69K Interest coverage -7.86x Neither company has much profit cushion over interest right now.
Total debt $2.66M Interest coverage -3.13x Neither company has much profit cushion over interest right now.
What you should know
The case for and against XXII
2 Rewards
3 Risks
Rewards
-
Free cash flow was positive in 1/10 years.
-
Trades at 0.0x P/E vs peer median 4.3x (100.0% cheaper).
Risks
-
Operating margin compressed from -83.9% to -247.8% over 3 years.
-
Return on equity was -105.7% last year — the company lost money on shareholders' equity.
-
Insider ownership is only 1.0% (peer median: 8.2%).
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)
0.00x
Forward P/E
-0.01x
P/B
0.00x
P/S
0.35x
EV/EBITDA
0.38x
PEG ratio
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Profitability
How much profit each dollar creates
Gross margin
-54.6%
Operating margin
-247.8%
Net margin
-76.0%
ROE
-105.7%
ROA
-30.9%
Health
Liquidity and balance-sheet strength
Debt / equity
0.09x
Current ratio
2.61x
Quick ratio
1.49x
Total debt
$1.75M
Total cash
$6.06M
Growth
How the business has been compounding
Revenue TTM
$27.72M
Revenue 5Y CAGR
5.7%
EPS TTM
78.07
EPS 5Y CAGR
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Cash flow
How much cash the business throws off
Operating CF TTM
$-8.36M
Free CF TTM
$-7.78M
FCF margin
-28.1%
Dividend
Shareholder payout
Yield
0.0%
Payout ratio
0.0%
Last ex-div date
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