MedMen (MMEN) is a U.S. cannabis producer and retailer which operates in multiple states.
The company reported 55.4% year-over-year revenue growth in Q4 2021, as its cannabis shops reopened post-COVID-19. The company is also opening new shops and expanding grow facilities.
The company’s stock price has seen a lot of action over the last 12 months, and currently sits at C$0.37.
I am bullish on the stock, and feel that it will undergo more uptrend as revenues continue to grow, and more stores are opened. (See MedMen stock charts on TipRanks)
Operations
The company operates 24 cannabis retail shops. MedMen has locations in California, Nevada, Illinois, Arizona, and Florida. MedMen has four retail shops in New York, which it is discontinuing.
The company also operates grow and manufacturing facilities in California, Nevada, Arizona, and Florida. It has plans of adding new stores in Illinois, Massachusetts, California, and Florida. The company is expanding its grow facilities in Florida and Arizona in preparation for increased wholesale operations.
Q4 Results
The company reported record-setting Q4 revenues of $42 million, a 55.4% year-over-year increase, and 18.5% sequential increase.
MedMen’s stores introduced delivery and curbside pickup in its California locations. The company also expanded it product and brand offerings in all of its stores.
The company enjoys a large retail footprint in California, which amounted to $25.2 million of its Q4 revenue. California sales were up 24.4% compared to last year’s quarter.
The company expects more overall growth in the California recreational cannabis market, and plans to continue expansion there. California is one of the largest cannabis markets in the world with $4.4 billion in cannabis sales estimated for 2021.
The company reported a gross profit of $19.7 million, a 79.1% increase from last year’s $11 million. MedMen operated at a net loss of $46.2 million due to the costs of opening new stores and expanding current facilities.
The company reported $11.9 million in cash, and total assets of $96.7 million. MedMen raised $100 million in capital since Q4 results via investments from Canadian Cannabis LP Tilray (TLRY), and Serruya, a private equity firm.
Wall Street’s Take
According to Wall Street, MedMen has a Hold consensus rating, based on two Holds assigned in the past three months. At C$0.39, the average MedMen price target implies 7.1% upside potential.
Conclusion
Multi-state operators (MSOs) stand to gain the most in the event of U.S. federal legalization.
MedMen operates 24 stores in five states, and has plans for expansion. The company continues to innovate its cannabis retail concept with home delivery and expanded brand offerings.
The company operates at a net loss, but has plenty of runway to complete its business vision.
MedMen’s stock trades near its target price, and is likely to uptrend.
Disclosure: At the time of publication, Alan Sumler had a position in MedMen and Tilray.
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