This Canadian cannabis operator cultivates and supplies cannabis products to medical dispensaries and pharmacies under Mind Naturals, Flora Lab, Mambe, and other brands worldwide…
The Toronto-based, Flora Growth Corp. (FLGC), went public on the Nasdaq on May 11. But its shares slipped more than 4% on their first trading day.
However, investors’ bullish sentiment surrounding the Columbian government’s revision of cannabis laws to allow access to cannabis products by Colombians has driven FLGC’s shares to a 278.1% gain over the past month. Global cannabis supplier FLGC is uniquely positioned to benefit from this legislative change.
But the company has yet to announce its earnings since going public. Furthermore, it is not yet profitable in a competitive cannabis landscape. Although a strategic partnership with Avaria and its plans to move its corporate headquarters to Miami from Toronto could bode well for the stock, uncertainty about its growth prospects could unnerve investors.
Click here to check out our Cannabis Industry Report for 2021
Here is what we think could influence FLGC’s performance in the coming months:
Columbian Legislative Update Bodes Well
Last month, Columbian President Ivan Duque signed a legislative decree to lift the ban on exports of dried cannabis flowers and allow the expansion of cannabis-based medicine sales in Columbia. This legislative update should enable cannabis cultivators to supply ingestible cannabinoid products and strengthen their position in major international markets. FLGC’s Colombian cultivation facility is well-positioned to capitalize on the rule change. Also, the manufacturing and sale of cannabis products in Columbia should increase the near-term revenue-generating prospects of the company’s Kasa Wholefoods division.
Strategic Joint Venture
On July 27, FLGC announced that it had signed a letter of intent with Ajaria Inc. to form a joint venture to manage the sale and distribution of Avaria’s KaLaya products across Latin America. The award-winning brand will be sold across FLGC’s 2,500-plus Colombian distribution channels. Furthermore, the company plans to work with Avaria to develop CBD-infused versions of KaLaya products for import into the United States and distribution across Latin America.
Inadequate Financials
FLGC’s trailing-12-month revenue stood at $106,000. Its trailing-12-month operating loss came in at $12.39 million, while its trailing-12-month net loss amounted to $14.17 million. The company’s trailing-12-month net interest income was negative $30,000, while its EBITDA came in at negative $14.19 million. Also, FLGC’s trailing-12-month operating cash flow and free cash flow stood at negative $8.42 million and $8.66 million, respectively.
Bleak Profit Margin
Its 0.01% trailing-12-month asset turnover ratio is 98.8% lower than the 0.8% industry average. Moreover, FLGC’s ROE, ROA, and ROTC are negative 188.1%, 72.9%, and 91.6%, respectively. And its 220.8% trailing-12-month CAPEX/Sales ratio is significantly higher than the 3% industry average.
POWR Ratings Reflect Uncertainty
FLGC has an overall C rating, which translates to…
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