As the 4th quarter cannabis earnings reports kick off this week, investors eagerly await the performance of the industry’s major players. Analysts have set their sights on EBITDA expectations, offering key insights into the financial health of the largest MSOs.
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The projections include expected percentage increases in EBITDA from Q4:22 to Q4:23, sequential quarter growth from Q3:23 to Q4:23, and year-over-year growth from 2023 to 2024.
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Surprisingly, sequential quarter growth appears to be negative for ten out of the twelve companies analyzed. The somewhat unexpected results prompt reflection on the factors contributing to this trend.
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An intriguing revelation from the data is the emphasis on year-over-year growth among smaller companies within the group. Despite lower Y/O/Y growth for some large-cap firms, a focus on more profitable markets suggests a promising outlook for 2024.
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Companies have shown resilience by optimizing operations, controlling working capital, and streamlining expenditure. This strategic approach positions them to potentially exceed expectations and deliver positive surprises.
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The focus on earnings estimate revisions rather than initial estimates underscores the dynamic nature of the industry. Analysts predict a modest growth in revenues and EBITDA margins for 2024, indicating a cautious yet optimistic outlook.
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The history of downward revisions in 2023 projections has left analysts more cautious, potentially leading to conservative estimates for 2024. However, the industry’s resilience and adaptability may result in outperforming these projections.
Amidst the shifting landscape of the cannabis industry, an analytical lens into EBITDA expectations provides investors with valuable insights and potential indicators of future performance.
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