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Fire & Flower: Featured Cannabis Stock

Should you invest in Fire & Flower Cannabis Stock? Recommendation: Keep Reading

Fire & Flower: Featured Cannabis StockFire & Flower (OTC: FFLWF) (TSX: FAF) is an adult-use cannabis retailer in Canada. They focus on education and the consumer experience with their Hifyre digital platform.  Fire & Flower is looking to move globally in the coming months.

Fire & Flower: Company Profile

HQ: Edmonton, Canada
Founded: 2017
Facilities: Alberta, Saskatchewan, Manitoba, Ontario
Symbol: FFLWF (OTC) & FAF (TSX)

Fire & Flower: Strong Focus

Fire & Flower is a leading adult-use retailer of cannabis, focused on expanding its market share in Canada with acquisitions and strategic partnerships. Fire & Flower is acquiring new consumers by educating them about cannabis through their Hifyre digital platform. Fire & Flower is aiming to help its customers through new payment mechanisms and distribution strategies to grow revenue base.

Fire & Flower: Neutral Size

Market Cap: US $55.78 mil
Enterprise Value: US $95.30 mil
Number of employees: 198

Fire & Flower: Neutral Markets

Primary: Canada
Secondary: USA
Subsidiaries
Majority Subsidiaries: Hifyre Inc., Open Fields Distribution, and Fire & Flower Inc.
Minority interests: NA

Fire & Flower: Weak Operations

Cultivation: None

Distribution
Direct sales: Though Hifyre digital platform
Store networks: 34 in operation and license pending for another 25 stores

Supply agreements: Signed supply agreement with Mera to which its subsidiary Open Fields will serve as a distributor of adult-use cannabis in Saskatchewan

Integration/Diversification:
Vertically integrated: no
Horizontally diversified: no

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Fire & Flower: Weak Financials

  • Revenue last quarter was $13.7 million
  • Margins: 34.3%
  • Shares Outstanding (diluted): 146.9 mil
  • EPS (diluted): 0.07

Fire & Flower: Neutral Management

CEO: Trevor Fencott
President (Hifyre): Matthew Hollingshead

Trevor Fencott, CEO of Fire & Flower, has vast experience in leading and managing cannabis production and education companies. Matthew Hollingshead, President of Hifyre, has a lot of experience leading cannabis digital companies and investing in the cannabis sector.

Fire & Flower: Strong Branding

Fire & Flower is investing heavily in branding development, product marketing, advertising and participating in industry events. Fire & Flower is spending more in each quarter for marketing launch events and brand development while opening new stores. Fire & Flower is anticipating that its Hifyre digital analytics and retail platform will help in identifying new revenue streams and explore the potential of entering new markets.

Fire & Flower: Neutral Valuation

  • Current share price: US $0.40
  • Price to Sales: 0.88 (Biopharma industry average = 7.5)
  • EV / Revenue: 2.43
  • 52 week low/high: US $0.19-$1.28
  • Price/Book: 0.88

Fire & Flower: Strong Financings

Fire & Flower raised $25.5 million on June 26, 2019, after closing a bought deal in the private placement. On August 7, 2019, Fire & Flower raised an additional $24.1 million from Strategic Investment which significantly improved the liquidity position.

Fire & Flower: High Risks

The markets in the CBD and hemp extracts industries are competitive and evolving. They face strong competition from both existing and emerging companies that offer similar products.

Fire & Flower: Strong Recommendation

Fire & Flower is a leading adult-use retailer of cannabis, focused on expanding its market share in Canada with acquisitions and strategic partnerships. Fire & Flower is acquiring new consumers by educating them about cannabis through their Hifyre digital platform.

Fire & Flower is aiming to help its customers through new payment mechanisms and distribution strategies to grow its revenue base. Fire & Flower is successfully adjusting to the new COVID 19 pandemic impact by deploying online payments, home delivery, and curbside pickup options.

Trevor Fencott, CEO of Fire & Flower, has experience in leading and managing cannabis production and education companies. Matthew Hollingshead, President of Hifyre, has a lot of experience leading cannabis digital companies and investing in the cannabis sector.

Fire & Flower raised $25.5 million on June 26, 2019, after closing a bought deal in the private placement. On August 7, 2019, Fire & Flower raised an additional $24.1 million from Strategic Investment which significantly improved the liquidity position.

Will its stock price improve in the long term? Likely

By March 31, 2019, Fire & Flower’s cash, cash equivalents, and short-term investments were $42.9 million which is enough to finance operations, manage working capital and opening new stores in 2020.

Fire & Flower’s return on total asset (ROA) was 5.9% which implies that it made a loss of $5.9 on every $100 spent on asset. This is comparatively better as compared to the industry average and it will improve further as they intend to open additional stores.

Fire & Flower’s revenue experienced double-digit growth in the last three quarters of 2019 and declared a positive net income of $10,2 million in the third quarter of 2019. Fire & Flower declared their first positive EPS of 0.05 in the third quarter of 2019 which is the result of their focus on solid financial performance. Watch for more good things to come from this company.

Fire & Flower: Featured Cannabis Stock


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