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Sundial Growers stock prediction as shares spike 20% on share buyback announcement

By:
on Nov 13, 2021
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  • Sundial Growers stock on Friday spiked more than 20% after announcing its Q3 results.
  • The company reported its most recent quarterly results before markets opened, missing revenue forecast.
  • Sundial also announced a share buyback program of C$100 million.

On Friday, Sundial Growers Inc. (NASDAQ:SNDL) shares surged more than 20% after reporting its most recent quarterly results. The company reported its fiscal third-quarter results before markets opened, missing analyst expectations on revenue. However, Sundial’s announcement of a C$100 million share repurchase program helped to drive the stock price higher.

The company posted fiscal third-quarter net revenue of $6.45 million, missing the consensus for analyst expectations of $$12.99 million. Its gross revenue of $11.02 million reflected a Y/Y decline of 29%.

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Sundial Growers’ cash, marketable securities, and long-term investments increased to C$1.2 billion as of the 9th of November compared to $1.1 billion on 30th September 2021. The company has C$571 million in free cash flows, with no outstanding debt.

Is it time to bet on Sundial shares?

From an investment perspective, Sundial Growers shares trade at a steep P/S ratio of 40.96 and a reasonable P/B ratio of 1.26, making the stock an interesting option for value investors.

In addition, analysts expect its earnings per share to grow by 100% next year, bouncing back from this year’s forecast decline of 63.70%.

Therefore, long-term investors could find the stock as an exciting option for their portfolios.

Source – TradingView

Technically, Sundial Growers shares seem to have recently spiked to complete an upward breakout from a sideways channel formation. As a result, the stock has rallied deep into overbought conditions, pushing the price above the 100-day moving average.

Therefore, investors could target short-term pullbacks at about $0.77, or lower at $0.65. On the other hand, if the rally continues, Sundial shares could find solid resistance at $0.96, or higher at $1.06.

Could be time to take some profits

In summary, although Sundial Growers shares are yet to retest this year’s highs despite the recent spike, the stock trades at a steep P/S ratio whilst expecting EPS to decline substantially this year.

Therefore, with the stock trading deep into overbought conditions, it could be time for profit-takers to swoop in.