Green Thumb Earnings: Profitability Exceeds Our Expectations; Shares Undervalued Despite Rally

No-moat Green Thumb’s fourth quarter exceeded our expectations, especially from a profitability perspective. While fourth-quarter revenue was roughly flat sequentially, the adjusted EBITDA margin expanded by about 300 basis points to an impressive 33%, the highest margin ever achieved. Impressively, improvement at the gross margin level indicates that at least some of it is due to operational improvements. As we forecast the adjusted EBITDA margin to approach the mid-30% range on a run-rate basis, we don’t expect to significantly change our long-term forecasts or fair value estimates of $26 and CAD 36 per share.