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AFC Gamma (AFCG)
NASDAQ:AFCG
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AFC Gamma
(NASDAQ:AFCG)
50Neutral
Positive Factors
Management Experience
Management's experience in the industry is positive for winning incremental market opportunity as cannabis operators' capital requirements persist.
Market Position
Operating as a pure-play cannabis lender is seen as a positive in a market where fewer lenders are present.
Potential Opportunities
Management noted that its active pipeline remains strong, highlighting potential deals and opportunities.
Negative Factors
Credit Issues
Approximately 39% of AFCG's loans are on non-accrual status, creating uncertainty in credit recovery.
Dividend Reduction
AFCG decreased its dividend by 30%, affecting investor returns negatively.
Earnings Decline
Distributable EPS declined to $0.29, which was below estimates and consensus, driven by lower net interest income.
AFC Gamma (AFCG) vs. S&P 500 (SPY)
Market Cap
$116.37M
Dividend Yield26.6%
Average Volume (3M)178.80K
Price to Earnings (P/E)5.3
Beta (1Y)0.97
Revenue Growth-28.20%
EPS Growth89.65%
CountryUS
EmployeesN/A
SectorReal Estate
Sector Strength65
IndustryREIT - Specialty
Share Statistics
EPS (TTM)0.21
Shares Outstanding22,596,006
10 Day Avg. Volume140,273
30 Day Avg. Volume178,802
Financial Highlights & Ratios
PEG Ratio0.07
Price to Book (P/B)0.60
Price to Sales (P/S)0.00
P/FCF Ratio5.82
Enterprise Value/Market Cap1.81
Enterprise Value/Revenue0.88
Enterprise Value/Gross Profit5.06
Enterprise Value/Ebitda4.46
Forecast
1Y Price Target
$9.00Price Target Upside74.76% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering4
AFC Gamma Business Overview & Revenue Model
Company DescriptionAFC Gamma (AFCG) is a commercial real estate finance company primarily focused on originating, structuring, and underwriting loans for the cannabis industry. The company operates as a real estate investment trust (REIT), providing capital solutions to established cannabis operators across the United States. AFC Gamma aims to support the cannabis sector by offering flexible and creative financing options, including senior secured loans, to facilitate growth and expansion.
How the Company Makes MoneyAFC Gamma makes money by providing loans to cannabis operators and earning interest income from these loans. As a REIT, AFC Gamma is required to distribute at least 90% of its taxable income to shareholders in the form of dividends, which it generates primarily through interest payments received on its loan portfolio. The company's revenue streams are primarily driven by the interest rates charged on its loans as well as any origination or structuring fees associated with the financing deals. Additionally, AFC Gamma may benefit from strategic partnerships with key players in the cannabis industry, enhancing its ability to source and structure attractive lending opportunities.
AFC Gamma Financial Statement Overview
Summary
AFC Gamma faces significant revenue challenges, with no revenue reported in 2024. Despite maintaining profitability in previous years, the balance sheet shows a reduction in equity and increased leverage. Cash flow generation remains positive but has decreased over the observed period. The company needs to address its revenue generation and leverage to improve its financial position.Income Statement
AFC Gamma has experienced declining revenue, with a significant drop from $71.54M in 2022 to $66.11M in 2023 and no revenue reported for 2024. Net profit margin improved to 25.39% in 2023 but remains unassessed for 2024 due to no revenue. EBIT and EBITDA margins were stable in prior years but unmeasurable for 2024. This indicates some profitability but significant top-line challenges.35
Negative
Balance Sheet
The company's balance sheet shows a reduction in stockholders' equity from $339.06M in 2022 to $201.38M in 2024, indicating a downward trend. The debt-to-equity ratio increased from 0.46 in 2022 to 0.44 in 2024, suggesting increased leverage. The equity ratio declined, reflecting a decrease in the proportion of equity financed by total assets.45
Neutral
Cash Flow
Operating cash flow has decreased from $31.32M in 2022 to $18.29M in 2024, and free cash flow followed a similar trend. Free cash flow to net income ratio indicates adequate cash generation relative to reported profits in 2023. This suggests some operational cash flow challenges despite maintaining positive free cash flow.50
Neutral
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 35.76M | 66.11M | 71.54M | 38.08M | 5.60M | Gross Profit |
| 35.76M | 52.04M | 60.36M | 35.43M | 5.23M | EBIT |
| 13.86M | 26.98M | 43.77M | 21.04M | 4.78M | EBITDA |
| 20.65M | 26.98M | 43.77M | 22.16M | 0.00 | Net Income Common Stockholders |
| 16.78M | 20.95M | 35.93M | 21.00M | 4.31M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 103.61M | 121.63M | 140.37M | 125.13M | 9.62M | Total Assets |
| 402.06M | 466.59M | 519.18M | 464.85M | 93.96M | Total Debt |
| 188.61M | 130.01M | 157.13M | 171.42M | 48.63M | Net Debt |
| 85.00M | 8.39M | 16.76M | 62.17M | 39.01M | Total Liabilities |
| 200.68M | 146.53M | 180.12M | 191.77M | 1.54M | Stockholders Equity |
| 201.38M | 320.05M | 339.06M | 273.08M | 91.65M |
| Cash Flow | Free Cash Flow | |||
| 21.56M | 21.23M | 31.32M | 9.54M | 1.52M | Operating Cash Flow |
| 21.56M | 21.23M | 31.32M | 9.54M | 1.52M | Investing Cash Flow |
| -4.85M | 28.52M | -16.34M | -248.46M | -32.43M | Financing Cash Flow |
| -34.72M | -68.49M | 16.15M | 338.54M | 40.53M |
AFC Gamma Technical Analysis
Negative
5.15
Price Trends
5.61
Negative
6.84
Negative
7.92
Negative
Market Momentum
-0.10
Positive
40.81
Neutral
22.45
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For AFCG, the sentiment is Negative. The current price of 5.15 is below the 20-day moving average (MA) of 5.42, below the 50-day MA of 5.61, and below the 200-day MA of 7.92, indicating a bearish trend. The MACD of -0.10 indicates Positive momentum. The RSI at 40.81 is Neutral, neither overbought nor oversold. The STOCH value of 22.45 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for AFCG.
AFC Gamma Risk Analysis
AFC Gamma disclosed 78 risk factors in its most recent earnings report. AFC Gamma reported the most risks in the “Finance & Corporate” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
AFC Gamma Peers Comparison
Overall Rating
UnderperformOutperform
Sector (60)
Financial Indicators
Performance Comparison
AFCG
AFC Gamma
5.11
-2.16
-29.71%
FPI
Farmland
10.68
0.72
7.23%
AFC Gamma Earnings Call Summary
Earnings Call Date:May 14, 2025
(Q1-2025)
| % Change Since: -10.75%|
Next Earnings Date:Aug 12, 2025
Earnings Call Sentiment Neutral
The earnings call demonstrated some financial stability and growth initiatives, such as the renewal of the credit facility and a recent $14 million transaction. However, challenges remain with legacy loans, declining interest income, and ongoing litigation, which balanced the overall sentiment.Q1-2025 Updates
Positive Updates
New Senior Secured Credit Facility
Advanced Flower Capital renewed its senior secured credit facility with a lead commitment from an FDIC insured bank, with the potential to expand to $100 million, and a maturity date of April 29, 2028.
Recent $14 Million Credit Facility
The company committed to a $14 million senior secured credit facility to subsidiaries of Standard Wellness Holdings, a privately held multistate operator.
First Quarter Distributable Earnings
Advanced Flower Capital generated distributable earnings of $0.21 per basic weighted average share of common stock.
Negative Updates
Interest Income Decline
Interest income declined from $9.2 million in Q4 2024 to $8.5 million in Q1 2025.
Exposure to Underperforming Credits
Despite progress in reducing exposure to underperforming credits, some legacy loans continue to impact earnings.
Pending Litigation with Justice Grown
Advanced Flower Capital is engaged in three legal proceedings with Justice Grown entities related to enforcing rights under the credit facility.
CECL Reserve and Unrealized Losses
The CECL reserve was $29.9 million, approximately 9.75% of loans at carrying value, with a total unrealized loss of $20.4 million.
Company Guidance
During the Q1 2025 earnings call for Advanced Flower Capital, the company provided guidance on several key metrics and developments. They reported distributable earnings of $0.21 per basic weighted average share of common stock and net interest income of $6.6 million. As of March 31, 2025, the company's portfolio included $366.3 million of principal outstanding across 17 loans, which increased to $372.5 million across 18 loans by May 1, 2025. The weighted average portfolio yield to maturity was approximately 18%. The company highlighted a $287 million active pipeline and emphasized their focus on high-quality borrowers and proven operators. They also discussed challenges with underperforming loans and the ongoing litigation with Justice Grown. Additionally, they renewed their senior secured credit facility with a FDIC-insured bank, capable of expanding to $100 million, with a maturity date of April 29, 2028.AFC Gamma Corporate Events
Shareholder Meetings
AFC Gamma Holds 2025 Annual Shareholders Meeting
Neutral
May 19, 2025
On May 19, 2025, Advanced Flower Capital Inc. held its 2025 Annual Meeting of Shareholders. During the meeting, shareholders voted on the reelection of a director and the ratification of CohnReznick LLP as the independent registered public accounting firm for 2025. The reelection of the Class II director nominee was approved, extending their term until the 2028 Annual Meeting. Additionally, the appointment of CohnReznick LLP was ratified, securing their role in overseeing the company’s financial audits for the year.
The most recent analyst rating on (AFCG) stock is a Buy with a $13.00 price target. To see the full list of analyst forecasts on AFC Gamma stock, see the AFCG Stock Forecast page.
Spark’s Take on AFCG Stock
According to Spark, TipRanks’ AI Analyst, AFCG is a Neutral.
AFC Gamma’s overall stock score is driven by significant financial challenges, including a lack of revenue for 2024 and increased leverage. Despite some positive developments in the earnings call, such as a renewed credit facility, the company faces ongoing challenges with underperforming loans and litigation. The stock’s low P/E ratio and high dividend yield may appeal to value and income investors, but the technical indicators suggest bearish momentum.
To see Spark’s full report on AFCG stock, click here.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.