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Turning Point Brands Inc (TPB)
:TPB

Turning Point Brands (TPB) AI Stock Analysis

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Turning Point Brands

(NYSE:TPB)

61Neutral
Turning Point Brands demonstrates financial resilience with strong cash flow and improved leverage ratios, despite declining revenue and operational challenges. The earnings call was positive, highlighting growth in key segments and optimism for future performance. Technical indicators suggest potential for recovery, but current valuation appears high. Overall, the stock is reasonably positioned for cautious optimism but requires careful monitoring of revenue trends and operational improvements.
Positive Factors
Growth Opportunities
The company has numerous growth opportunities within its core Zig-Zag segment, including expansion into dispensaries, smoke shops and headshops, while the Stoker’s segment enjoys higher prices and share gains.
Market Expansion
TPB launched a nicotine pouch brand called FRE to address the fast-growing ~$3B market.
Negative Factors
Revenue Challenges
The revenue drag from its low-margin vape hardware distribution business should be less prevalent as management prioritizes higher growth/margin opportunities, which is expected to drive gross margin improvement.

Turning Point Brands (TPB) vs. S&P 500 (SPY)

Turning Point Brands Business Overview & Revenue Model

Company DescriptionTurning Point Brands (TPB) is a publicly traded company that specializes in providing high-quality tobacco products, alternative smoking accessories, and innovative vaping solutions. The company operates through three primary segments: Zig-Zag, Stoker's, and NewGen. Zig-Zag offers rolling papers and related products, Stoker's provides moist snuff and loose leaf chewing tobacco, while NewGen focuses on electronic cigarettes, vaporizers, and other modern nicotine delivery systems.
How the Company Makes MoneyTurning Point Brands generates revenue through the sale of tobacco-related products and alternative smoking solutions across its three segments. The Zig-Zag segment primarily earns from the sale of branded rolling papers and accessories, capitalizing on the strong brand recognition and consumer loyalty. The Stoker's segment drives revenue through the sale of traditional tobacco products, such as moist snuff and chewing tobacco. The NewGen segment contributes to earnings by offering modern alternatives, including e-cigarettes and vaping products, catering to shifting consumer preferences towards less traditional nicotine consumption methods. Additionally, TPB benefits from strategic distribution partnerships and a diversified portfolio that mitigates risks associated with regulatory changes in the tobacco industry.

Turning Point Brands Financial Statement Overview

Summary
Turning Point Brands shows resilience in profitability and cash flow management despite revenue declines. Improvement in margins and leverage ratios signifies enhanced operational efficiency and financial stability. However, negative EBIT and EBITDA margins indicate underlying operational challenges that need addressing. The company is well-positioned with strong cash flow and improved equity ratios, but must focus on reigniting revenue growth to maintain long-term sustainability.
Income Statement
55
Neutral
Turning Point Brands has experienced a decline in revenue over the past year, with a Revenue Growth Rate of -11.02% from 2023 to 2024. The Gross Profit Margin remained stable at around 55.9%, indicating consistent cost management relative to revenue. However, the Net Profit Margin improved significantly to 11.04% from 9.49% the previous year, showing enhanced profitability. The EBIT and EBITDA margins turned negative, suggesting operational challenges.
Balance Sheet
60
Neutral
The company's Debt-to-Equity Ratio has improved from 2.50 in 2023 to 1.36 in 2024, reflecting decreased leverage and a healthier balance sheet. Return on Equity (ROE) increased to 20.90%, which indicates efficient use of equity to generate profits. The Equity Ratio also improved to 38.60%, suggesting a stronger equity position relative to assets and reduced financial risk.
Cash Flow
70
Positive
Free Cash Flow grew by 2.07% in 2024, indicating strong cash generation capabilities. The Operating Cash Flow to Net Income Ratio is robust at 1.68, highlighting efficient cash conversion from earnings. Free Cash Flow to Net Income Ratio is also favorable at 1.57, suggesting good free cash flow generation relative to net income, despite revenue challenges.
Breakdown
Dec 2024Dec 2023Dec 2022Dec 2021Dec 2020
Income StatementTotal Revenue
360.66M405.39M415.01M445.47M405.11M
Gross Profit
201.56M203.24M205.54M217.83M189.64M
EBIT
80.83M82.58M75.51M90.32M64.07M
EBITDA
84.60M82.69M40.80M90.55M67.52M
Net Income Common Stockholders
39.81M38.46M11.64M52.06M38.19M
Balance SheetCash, Cash Equivalents and Short-Term Investments
46.16M117.89M106.40M128.32M41.77M
Total Assets
493.35M569.36M572.11M601.56M489.33M
Total Debt
258.15M377.99M417.35M427.51M306.08M
Net Debt
212.00M260.10M310.95M299.19M264.31M
Total Liabilities
302.97M417.35M458.73M467.84M358.49M
Stockholders Equity
190.38M150.98M111.64M131.40M126.79M
Cash FlowFree Cash Flow
62.44M61.17M22.59M62.06M37.54M
Operating Cash Flow
67.06M66.88M30.27M68.22M43.68M
Investing Cash Flow
-10.51M-5.91M-18.79M-58.84M-64.82M
Financing Cash Flow
-128.28M-49.51M-43.30M57.07M-29.34M

Turning Point Brands Technical Analysis

Technical Analysis Sentiment
Negative
Last Price56.94
Price Trends
50DMA
62.67
Negative
100DMA
59.24
Negative
200DMA
48.16
Positive
Market Momentum
MACD
-1.46
Positive
RSI
28.60
Positive
STOCH
10.00
Positive
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For TPB, the sentiment is Negative. The current price of 56.94 is below the 20-day moving average (MA) of 66.14, below the 50-day MA of 62.67, and above the 200-day MA of 48.16, indicating a neutral trend. The MACD of -1.46 indicates Positive momentum. The RSI at 28.60 is Positive, neither overbought nor oversold. The STOCH value of 10.00 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for TPB.

Turning Point Brands Risk Analysis

Turning Point Brands disclosed 46 risk factors in its most recent earnings report. Turning Point Brands 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

Turning Point Brands Peers Comparison

Overall Rating
UnderperformOutperform
Sector (63)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
74
Outperform
$29.28B9.3145.38%5.32%5.61%23.39%
MOMO
72
Outperform
$98.31B8.89-503.31%6.92%-0.28%43.51%
PMPM
67
Neutral
$236.49B33.65-37142.11%3.50%7.75%-9.85%
63
Neutral
$20.77B13.59-10.67%7.41%1.48%9.07%
UVUVV
62
Neutral
$1.34B10.898.32%5.95%12.88%-6.33%
BTBTI
61
Neutral
$89.85B23.485.87%7.11%-2.51%
TPTPB
61
Neutral
$1.05B27.7127.80%0.47%-0.13%2.92%
* Consumer Defensive Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
TPB
Turning Point Brands
56.94
29.50
107.51%
MO
Altria Group
58.55
17.77
43.58%
BTI
British American Tobacco
41.38
13.46
48.21%
PM
Philip Morris
150.49
61.03
68.22%
UVV
Universal
54.70
7.84
16.73%
IMBBY
Imperial Brands
36.09
15.23
73.01%

Turning Point Brands Earnings Call Summary

Earnings Call Date: Mar 6, 2025 | % Change Since: -15.04% | Next Earnings Date: Apr 30, 2025
Earnings Call Sentiment Positive
The earnings call reflected a positive outlook with significant growth in revenue and adjusted EBITDA, driven by strong performance in the modern oral category and Stoker's revenue. Despite some challenges in gross margin and specific segments like Zig Zag and MST, the company is optimistic about future growth, particularly in the modern oral category.
Highlights
Revenue Growth
Fourth-quarter revenue increased 13% to $93.7 million. Full-year revenue was up 11% to $360.7 million.
Adjusted EBITDA Growth
Adjusted EBITDA increased 5% to $26.2 million for the quarter and 12% to $104.5 million for the full year.
Stoker's Revenue Surge
Stoker's revenue increased 26% to $47.8 million for the quarter, reflecting strong performance in the modern oral category.
Modern Oral Category Expansion
Modern oral brands Free and Out combined to generate significant revenue, with Free sales increasing 419% year-over-year.
Guidance for 2025
2025 adjusted EBITDA guidance set at $108 to $113 million, with modern oral sales expected to reach $60 to $80 million.
Lowlights
Gross Margin Decline
Full-year gross margin was down 39 basis points to 55.9%, with a quarterly drop of 108 basis points to 56%, driven by product mix.
Zig Zag Segment Pressure
Zig Zag segment faced pressure from the unwind of the Clipper relationship and timing and FX-related issues in the Canadian business.
MST Segment Flat
Stoker's MST net sales declined 1% year-over-year for the fourth quarter, facing tough comparables from the previous year.
Company Guidance
During the Turning Point Brands, Inc. conference call for the fourth quarter and fiscal year 2024, the company provided several key financial metrics and forward guidance. Revenue for Q4 increased by 13% to $93.7 million, with adjusted EBITDA up 5% to $26.2 million. For the full year, adjusted EBITDA rose 12% to $104.5 million. The company projected 2025 adjusted EBITDA to fall between $108 million and $113 million, driven by growth in their Zig Zag and Stoker businesses, and modern oral brands Free and Out are expected to generate $60 million to $80 million in combined revenue. Stoker's revenue grew 26% in Q4 to $47.8 million, while Zig Zag revenue increased by 2%, or 4% excluding Clipper. The company also reported a gross margin decrease of 108 basis points year-over-year for the quarter. Free cash flow for the year was noted at $56.3 million, and they provided a 2025 CapEx budget of $4 to $5 million, excluding potential projects related to modern oral business.

Turning Point Brands Corporate Events

Business Operations and StrategyFinancial Disclosures
Turning Point Brands Reports Strong Q3 2024 Results
Positive
Nov 7, 2024

Turning Point Brands reported robust third-quarter 2024 results with a 3.8% rise in consolidated net sales to $105.6 million and a notable 11.3% surge in adjusted EBITDA to $27.2 million. The company saw significant growth in its Zig-Zag and Stoker’s product lines, with net sales increasing 5.5% and 12.1% respectively. Buoyed by these positive results, TPB raised its full-year EBITDA guidance, underlining a strong market position and optimistic growth trajectory.

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.