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AFC Gamma (AFCG)
NASDAQ:AFCG
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AFC Gamma
(NASDAQ:AFCG)
48Neutral
Positive Factors
Loan Originations
The company has closed $116MM in originations YTD, passing its 2024 target of $100MM, which is viewed positively.
Market Position
Operating as a pure-play cannabis lender is seen as a positive in a market where fewer lenders are present.
Pipeline Opportunities
Management noted that its active pipeline remains strong, highlighting potential deals and opportunities.
Negative Factors
Credit Recovery
Approximately 39% of AFCG's loans are on non-accrual status, creating uncertainty in credit recovery.
Earnings Performance
Distributable EPS declined to $0.29, which was below estimates and consensus, driven by lower net interest income.
Investor Returns
AFCG decreased its dividend by 30%, affecting investor returns negatively.
AFC Gamma (AFCG) vs. S&P 500 (SPY)
Market Cap
$143.48M
Dividend Yield25.39%
Average Volume (3M)247.17K
Price to Earnings (P/E)8.2
Beta (1Y)1.04
Revenue Growth-19.21%
EPS Growth-21.10%
CountryUS
EmployeesN/A
SectorReal Estate
Sector Strength71
IndustryREIT - Specialty
Share Statistics
EPS (TTM)0.80
Shares Outstanding22,596,006
10 Day Avg. Volume405,056
30 Day Avg. Volume247,167
Financial Highlights & Ratios
PEG RatioN/A
Price to Book (P/B)N/A
Price to Sales (P/S)3.16
Price to Cash Flow (P/CF)16.20
P/FCF Ratio9.50
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$9.67Price Target Upside52.28% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering4
AFC Gamma Business Overview & Revenue Model
Company DescriptionAFC Gamma, Inc. originates, structures, underwrites, and invests in senior secured loans, and other types of loans and debt securities for established companies operating in the cannabis industry in states that have legalized medicinal and/or adult use cannabis. It primarily originates loans structured as senior loans secured by real estate, equipment, and licenses and/or other assets of the loan parties to the extent permitted by applicable laws and the regulations governing such loan parties. AFC Gamma, Inc. has elected and qualified to be taxed as a real estate investment trust for the United States federal income tax purposes under the Internal Revenue Code of 1986. The company was incorporated in 2020 and is based in West Palm Beach, Florida.
How the Company Makes MoneyAFC Gamma makes money by providing loans to cannabis operators and earning interest income from these loans. As a REIT, AFC Gamma is required to distribute at least 90% of its taxable income to shareholders in the form of dividends, which it generates primarily through interest payments received on its loan portfolio. The company's revenue streams are primarily driven by the interest rates charged on its loans as well as any origination or structuring fees associated with the financing deals. Additionally, AFC Gamma may benefit from strategic partnerships with key players in the cannabis industry, enhancing its ability to source and structure attractive lending opportunities.
AFC Gamma Financial Statement Overview
Summary
AFC Gamma faces significant revenue challenges with no revenue reported in 2024. Although profitability was maintained in previous years, the balance sheet shows reduced equity and increased leverage. Cash flow generation remains positive but has decreased. The company needs to address its revenue generation and leverage to improve its financial position.Income Statement
AFC Gamma has experienced declining revenue, with a significant drop from $71.54M in 2022 to $66.11M in 2023 and no revenue reported for 2024. Net profit margin improved to 25.39% in 2023 but remains unassessed for 2024 due to no revenue. EBIT and EBITDA margins were stable in prior years but unmeasurable for 2024. This indicates some profitability but significant top-line challenges.35
Negative
Balance Sheet
The company's balance sheet shows a reduction in stockholders' equity from $339.06M in 2022 to $201.38M in 2024, indicating a downward trend. The debt-to-equity ratio increased from 0.46 in 2022 to 0.44 in 2024, suggesting increased leverage. The equity ratio declined, reflecting a decrease in the proportion of equity financed by total assets.45
Neutral
Cash Flow
Operating cash flow has decreased from $31.32M in 2022 to $18.29M in 2024, and free cash flow followed a similar trend. Free cash flow to net income ratio indicates adequate cash generation relative to reported profits in 2023. This suggests some operational cash flow challenges despite maintaining positive free cash flow.50
Neutral
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 35.76M | 66.11M | 71.54M | 38.08M | 5.60M | Gross Profit |
| 35.76M | 52.04M | 60.36M | 35.43M | 5.23M | EBIT |
| 13.86M | 26.98M | 43.77M | 21.04M | 4.78M | EBITDA |
| 13.86M | 26.98M | 43.77M | 22.16M | 0.00 | Net Income Common Stockholders |
| 16.78M | 20.95M | 35.93M | 21.00M | 4.31M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 103.61M | 121.63M | 140.37M | 125.13M | 9.62M | Total Assets |
| 402.06M | 466.59M | 519.18M | 464.85M | 93.96M | Total Debt |
| 88.61M | 130.01M | 157.13M | 171.42M | 48.63M | Net Debt |
| -15.00M | 8.39M | 16.76M | 62.17M | 39.01M | Total Liabilities |
| 200.68M | 146.53M | 180.12M | 191.77M | 1.54M | Stockholders Equity |
| 201.38M | 320.05M | 339.06M | 273.08M | 91.65M |
| Cash Flow | Free Cash Flow | |||
| 18.29M | 21.23M | 31.32M | 9.54M | 1.52M | Operating Cash Flow |
| 18.29M | 21.23M | 31.32M | 9.54M | 1.52M | Investing Cash Flow |
| -4.85M | 28.52M | -16.34M | -248.46M | -32.43M | Financing Cash Flow |
| -34.72M | -68.49M | 16.15M | 338.54M | 40.53M |
AFC Gamma Technical Analysis
Negative
6.35
Price Trends
8.08
Negative
8.55
Negative
8.70
Negative
Market Momentum
-0.57
Positive
23.71
Positive
11.34
Positive
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For AFCG, the sentiment is Negative. The current price of 6.35 is below the 20-day moving average (MA) of 7.63, below the 50-day MA of 8.08, and below the 200-day MA of 8.70, indicating a bearish trend. The MACD of -0.57 indicates Positive momentum. The RSI at 23.71 is Positive, neither overbought nor oversold. The STOCH value of 11.34 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for AFCG.
AFC Gamma Risk Analysis
AFC Gamma disclosed 78 risk factors in its most recent earnings report. AFC Gamma reported the most risks in the “Finance & Corporate” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
AFC Gamma Peers Comparison
Overall Rating
UnderperformOutperform
Sector (61)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
76 Outperform | $1.80B | 11.51 | 8.20% | 11.82% | -0.32% | -4.24% | |
61 Neutral | $4.75B | 18.23 | -3.59% | 10.86% | 6.00% | -21.50% | |
52 Neutral | $237.95M | 3.57 | 8.20% | ― | 1.46% | -38.55% | |
48 Neutral | $143.48M | 8.16 | 6.37% | 25.39% | -19.21% | -21.10% | |
44 Neutral | $639.76M | ― | -7.28% | ― | 18.38% | 86.59% | |
43 Neutral | $75.51M | ― | -33.74% | ― | -16.39% | -9.08% |
* Real Estate Sector Average
Performance Comparison
AFCG
AFC Gamma
6.35
-1.30
-16.99%
REI
Ring Energy
1.20
-0.70
-36.84%
IIPR
Innovative Industrial Properties
66.29
-29.53
-30.82%
GRWG
GrowGeneration
1.28
-1.49
-53.79%
TLRY
Tilray
0.68
-1.63
-70.56%
CURLF
Curaleaf Holdings
0.91
-4.14
-81.98%
AFC Gamma Earnings Call Summary
Earnings Call Date: Mar 13, 2025 | % Change Since: -25.21% | Next Earnings Date: May 13, 2025
Earnings Call Sentiment Neutral
The earnings call presents both positive developments in terms of exceeding origination targets and managing underperforming assets, but is weighed down by significant lowlights, particularly issues with Justice Grown and the resulting impact on earnings and dividends.Highlights
Successful Originations Exceeding Goals
AFC set a goal of $100 million in originations for fiscal year 2024 and exceeded it by originating $135 million in new commitments. Since the end of 2024, they have closed an additional $15 million in new commitments.
Strong Active Deal Pipeline
As of March 1, 2025, AFC reported an active deal pipeline of over $380 million, indicating strong demand for capital in the cannabis sector.
Portfolio Management Success
In 2024, AFC received $119 million of paydowns from underperforming credits and redeployed that capital across nine new loans, which could unlock future earnings potential.
Positive Outcomes Related to Loan Exits
AFC successfully exited five underperforming loans in 2024, including a significant $84 million exit of a loan to a subsidiary of Public Company H, with a full paydown at par.
Lowlights
Underperformance Impact on Earnings
AFC's fourth-quarter earnings and the start of 2025 were negatively impacted by the underperformance of some legacy loans, resulting in a lowered dividend of $0.23 per share.
Challenges with Justice Grown
There were significant issues with Justice Grown (Private Company G), including defaults under the forbearance agreement and credit facility, causing legal disputes and impacting AFC's financial outlook.
GAAP Net Loss for Q4 2024
AFC reported a GAAP net loss of $1 million or $0.05 per basic weighted average common share for the fourth quarter of 2024.
Company Guidance
In the AFC's Fourth Quarter and Fiscal Year 2024 Earnings Call, the company provided detailed guidance and updates for the upcoming year. AFC outlined their achievements in 2024, surpassing their origination goal by closing $135 million in new commitments against a target of $100 million. The company plans to continue focusing on cannabis investments, with an active deal pipeline of over $380 million as of March 1, 2025. They emphasized improving portfolio diversification and underwriting processes, reducing exposure to underperforming credits, and actively managing their portfolio to preserve capital. AFC's distributable earnings for the fourth quarter were $0.29 per share, and they declared a first-quarter dividend of $0.23 per share for 2025. Their portfolio had a weighted average yield to maturity of approximately 18% with $356.8 million in principal outstanding across 16 loans at the end of 2024. AFC expressed a commitment to backing strong operators within the cannabis industry, despite ongoing challenges with certain underperforming credits.AFC Gamma Corporate Events
Executive/Board ChangesBusiness Operations and StrategyRegulatory Filings and Compliance
Leadership Changes and Rebranding at AFC Gamma
Neutral
Oct 22, 2024
In a significant reshuffle at Advanced Flower Capital Inc., Leonard M. Tannenbaum stepped down as Chief Investment Officer while transitioning from Executive Chairman to Chairman, effective October 21, 2024. Robyn Tannenbaum, previously the company’s President, has been appointed as the new Chief Investment Officer. The company also officially changed its name from AFC Gamma, Inc. and updated its bylaws to align with regulatory requirements.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.