High Tide (TSXV:HITI): Assessing Valuation After Record Q3 Results and German Market Expansion

If you’re looking at High Tide (TSXV:HITI) and wondering where it could go next, you’re not alone. The company just delivered record revenue and adjusted EBITDA for its third fiscal quarter, which included positive free cash flow and net income for the period. These results come at a time when High Tide is not only expanding its core retail footprint in Canada but is also taking its first major steps into Europe by acquiring a majority stake in Remexian, a German medical cannabis player. This kind of operational progress, paired with strong financials, is bound to get investors thinking twice about what’s being priced into the shares right now.

Over the past year, High Tide’s stock performance has been heating up, gaining 77% and extending its momentum with a 71% rally in the past three months alone. These moves highlight growing enthusiasm for the company’s ability to scale its Canna Cabana chain, which now numbers over 200 stores, along with the appeal of its loyalty-driven discount model. Factor in the fresh European exposure through the Remexian deal, and it is clear that investors are rewarding growth and diversification that is increasingly hard to find in this sector.

But here is the real question: after a year of strong returns and a string of operational wins, is High Tide still trading at a compelling value, or are markets already baking in the next wave of growth?

Most Popular Narrative: 30.2% Undervalued

According to the most widely referenced narrative, High Tide shares are currently viewed as significantly undervalued, with analysts pointing to a sizeable discount compared to their calculated fair value. This view is based on robust growth projections and recent operational breakthroughs that are anticipated to boost future profits and valuation multiples.

"High Tide's plan to expand its presence in the German medical cannabis market could drive future revenue growth, supported by leveraging existing relationships with Canadian producers. The expansion of the Cabana Club loyalty program with a target to reach 2.5 million members is expected to enhance customer retention and increase revenue per customer, impacting overall revenue positively."

Want to uncover what’s fueling this bullish outlook? Analysts have built their case on bold growth projections and profit estimates that could send shares soaring. Are you interested in the exact numbers that have led to this eye-opening valuation gap? Dive in to see the surprising market assumptions and ambitious targets behind the narrative’s fair value calculation.

Result: Fair Value of $7.33 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, ongoing regulatory uncertainty in Germany and the challenge of growing competition across Canada could still dampen High Tide's ambitious growth outlook.

Find out about the key risks to this High Tide narrative.

Another View: The SWS DCF Model

Looking through the lens of the SWS DCF model tells a different story. Unlike analyst price targets, which focus on future earnings, this method suggests High Tide could actually be overvalued at its current share price. Is this fundamental approach signaling caution, or is the market seeing something the models do not?

Look into how the SWS DCF model arrives at its fair value.

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out High Tide for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover undervalued stocks based on their cash flows. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Build Your Own High Tide Narrative

If you see the story differently or want to dig deeper to form your own conclusions, try building your personal narrative from scratch in just a few minutes using Do it your way.

A good starting point is our analysis highlighting 4 key rewards investors are optimistic about regarding High Tide.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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