uploads///Forward EV to Sales Multiple for Cannabis Producers

Comparing Cannabis Producers’ EV-to-Sales Valuation Multiples

Adam Jones - Author

Aug. 18 2020, Updated 5:22 a.m. ET

Comparative analysis

In our previous article, we discussed how the overall median valuation multiple, the forward EV-to-sales (enterprise-value-to-sales) multiple, of cannabis companies (HMLSF) trended lower on April 26. 

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Comparing peers

In the chart above, we see the current forward EV-to-sales multiple of nine Canadian licensed producers on April 26. Four companies were trading above the median of 9.5x while four companies were trading below the median on April 26.

Aphria was trading right at the peers’ median but at a discount to its median of 12.7x since January 2017.

Trading at a premium

The companies that were trading at a premium to the peers’ medians include Cronos Group (CRON), which was trading at a forward multiple of 21.4x. The company is also trading at a premium to its median of 15.3x since the beginning of 2017. Aurora Cannabis (ACB)(ACBFF) was trading at a premium of 14.8x, compared to its median of 7.5x since January 2017.

Canopy Growth (WEED) was trading at a premium of 14.2x, compared to its median of 11.1x over the last year. MedReleaf (LEAF) was trading at a premium of 12.3x, compared to its median of 10.8x over the last year.

Trading at a discount

The four companies trading at a discount to the peers’ medians are Supreme Cannabis (FIRE) at 5.5x, Hydropothecary (THCX) at 5.4x, OrganiGram (OGI) at 5.1x, and CannTrust (TRST) at 4.8x. These companies were also trading at a discount compared to their respective one-year medians of 7.4x, 6.2x, 6.8x, and 7.5x, respectively.

Next, we’ll see how these companies fared in terms of EV-to-EBITDA multiples.


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