The Parent Company – A compelling opportunity, minimized by overpromise and dilution.

by | Apr 22, 2021 | Company Analysis, Free

This article was first published to Premium Members Only, and became available to Free Members on July 21, 2021. The model download remains Premium Member Only.

This report includes detailed financial and operational analysis, and a working model. The model includes guidance driven statements, proprietary estimates, scenario analysis, share counts, price targets, and more, and the article includes stock catalysts, justification of proprietary estimates, organizational structure, and key risks.    

Executive Summary:

At MJResearchCo, we choose companies, states, and events for in-depth research because we have a strong positive bias before initiating our research.

Our beginning hypothesis on The Parent Company (TPCO) was the company was in a rare position to create a dominant California focused “house of brands” operator by consolidating smaller operators at high incremental margins onto a fixed infrastructure, which would be accelerated by tax audits coming to cannabis operators in California.

The business model would be the first of its kind for cannabis, and the forecasted financial model would justify at least in-line multiples, if not a meaningful premium to peers.

Ultimately a positive return in the stock will need to be driven by multiple expansion, and that will only come with successful margin expansion and integration acquisitions with limited dilution.

However, our research reflects a different situation in the near term: