NOVA CANNABIS INC (NOVC.CA) Stock Fundamental Analysis

Canada - Toronto Stock Exchange - TSX:NOVC - CA66980W1041 - Common Stock

1.75 CAD

0 (0%)

Last: 10/22/2024, 7:00:00 PM

Fundamental Rating

Taking everything into account, NOVC scores 4 out of 10 in our fundamental rating. NOVC was compared to 19 industry peers in the Specialty Retail industry. While NOVC seems to be doing ok healthwise, there are quite some concerns on its profitability. NOVC is showing excellent growth while it is valued at reasonable prices. Keep and eye on this one!

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1. Profitability

1.1 Basic Checks

In the past year NOVC was profitable.
In the past year NOVC had a positive cash flow from operations.
NOVC had negative earnings in 4 of the past 5 years.
The reported operating cash flow has been mixed in the past 5 years: NOVC reported negative operating cash flow in multiple years.

1.2 Ratios

NOVC has a Return On Assets (2.32%) which is comparable to the rest of the industry.
The Return On Equity of NOVC (5.32%) is comparable to the rest of the industry.
The Return On Invested Capital of NOVC (7.21%) is better than 75.00% of its industry peers.

		Industry Rank	Sector Rank
ROA	2.32%
ROE	5.32%
ROIC	7.21%

ROA(3y)-8.27%

ROA(5y)-6.93%

ROE(3y)-17.5%

ROE(5y)-14.76%

ROIC(3y)N/A

ROIC(5y)N/A

1.3 Margins

The Profit Margin of NOVC (1.14%) is comparable to the rest of the industry.
With a Operating Margin value of 4.17%, NOVC perfoms like the industry average, outperforming 56.25% of the companies in the same industry.
In the last couple of years the Operating Margin of NOVC has grown nicely.
NOVC has a worse Gross Margin (24.83%) than 75.00% of its industry peers.
In the last couple of years the Gross Margin of NOVC has declined.

		Industry Rank	Sector Rank
OM	4.17%
PM (TTM)	1.14%
GM	24.83%

OM growth 3Y28.41%

OM growth 5YN/A

PM growth 3YN/A

PM growth 5YN/A

GM growth 3Y-10.26%

GM growth 5YN/A

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ROA

ROE

ROIC

Operating and Profit Margin

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2. Health

2.1 Basic Checks

The Return on Invested Capital (ROIC) is below the Cost of Capital (WACC), so NOVC is destroying value.
Compared to 1 year ago, NOVC has about the same amount of shares outstanding.
Compared to 1 year ago, NOVC has an improved debt to assets ratio.

2.2 Solvency

NOVC has an Altman-Z score of 2.85. This is not the best score and indicates that NOVC is in the grey zone with still only limited risk for bankruptcy at the moment.
NOVC has a Altman-Z score (2.85) which is in line with its industry peers.
NOVC has a debt to FCF ratio of 5.15. This is a neutral value as NOVC would need 5.15 years to pay back of all of its debts.
The Debt to FCF ratio of NOVC (5.15) is comparable to the rest of the industry.
A Debt/Equity ratio of 0.94 indicates that NOVC is somewhat dependend on debt financing.
NOVC has a worse Debt to Equity ratio (0.94) than 62.50% of its industry peers.

		Industry Rank	Sector Rank
Debt/Equity	0.94
Debt/FCF	5.15
Altman-Z	2.85

ROIC/WACC0.92

WACC7.88%

2.3 Liquidity

NOVC has a Current Ratio of 1.96. This is a normal value and indicates that NOVC is financially healthy and should not expect problems in meeting its short term obligations.
The Current ratio of NOVC (1.96) is better than 75.00% of its industry peers.
NOVC has a Quick Ratio of 1.07. This is a normal value and indicates that NOVC is financially healthy and should not expect problems in meeting its short term obligations.
NOVC has a better Quick ratio (1.07) than 75.00% of its industry peers.

		Industry Rank	Sector Rank
Current Ratio	1.96
Quick Ratio	1.07

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WACC

Debt/Equity

How to determine the health of a company

Altman-Z score

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3. Growth

3.1 Past

NOVC shows a strong growth in Earnings Per Share. In the last year, the EPS has been growing by 155.95%, which is quite impressive.
NOVC shows quite a strong growth in Revenue. In the last year, the Revenue has grown by 9.84%.
NOVC shows a strong growth in Revenue. Measured over the last years, the Revenue has been growing by 60.01% yearly.

EPS 1Y (TTM)155.95%

EPS 3YN/A

EPS 5YN/A

EPS Q2Q%-29.05%

Revenue 1Y (TTM)9.84%

Revenue growth 3Y60.01%

Revenue growth 5YN/A

Sales Q2Q%8.05%

3.2 Future

The Earnings Per Share is expected to grow by 45.10% on average over the next years. This is a very strong growth
NOVC is expected to show quite a strong growth in Revenue. In the coming years, the Revenue will grow by 14.38% yearly.

EPS Next Y-26.32%

EPS Next 2Y45.1%

EPS Next 3YN/A

EPS Next 5YN/A

Revenue Next Year5.23%

Revenue Next 2Y10.06%

Revenue Next 3Y13.72%

Revenue Next 5Y14.38%

3.3 Evolution

The estimated forward Revenue growth is still strong, although it is decreasing when compared to the stronger growth in the past years.

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4. Valuation

4.1 Price/Earnings Ratio

NOVC is valuated quite expensively with a Price/Earnings ratio of 29.17.
The rest of the industry has a similar Price/Earnings ratio as NOVC.
When comparing the Price/Earnings ratio of NOVC to the average of the S&P500 Index (28.60), we can say NOVC is valued inline with the index average.
Based on the Price/Forward Earnings ratio of 8.58, the valuation of NOVC can be described as reasonable.
81.25% of the companies in the same industry are more expensive than NOVC, based on the Price/Forward Earnings ratio.
NOVC's Price/Forward Earnings ratio indicates a rather cheap valuation when compared to the S&P500 average which is at 25.83.

		Industry Rank	Sector Rank
PE	29.17
Fwd PE	8.58

4.2 Price Multiples

Based on the Enterprise Value to EBITDA ratio, NOVC is valued a bit cheaper than 62.50% of the companies in the same industry.
NOVC's Price/Free Cash Flow ratio is a bit cheaper when compared to the industry. NOVC is cheaper than 68.75% of the companies in the same industry.