uploads///Forward EV to EBITDA Multiple for Cannabis Companies

Comparing Cannabis Producers’ Valuation Multiples

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Apr. 30 2018, Updated 2:31 p.m. ET

EV-to-EBITDA multiples

In the previous part of this series, we compared the forward EV-to-sales multiples of individual cannabis licensed producers (HMMJ) with the peers’ median on April 26. We’ll do a similar comparison for the EV-to-EBITDA[1. enterprise value to earnings before interest, tax, depreciation, and amortization] multiple as well.

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Comparing peers

In the chart above, we can see the current forward EV-to-EBITDA multiple for nine Canadian licensed producers on April 26. Four companies were trading above the median of 29.1x while four companies were trading below the median on April 26.

Aphria (APH) was trading right at the peers’ median but at a discount to its own median of 37.8x since January 2017.

Trading at a premium

The same four companies were trading at a premium to the peers’ median. Cronos Group (CRON) traded at a forward multiple of 71.7x, and Aurora Cannabis (ACB)(ACBFF) was trading at a premium of 40.5x. Canopy Growth (WEED) was trading at a premium of 93.9x, and MedReleaf (LEAF) was trading at a premium of 40.7x.

Aurora Cannabis and MedReleaf were also trading at a premium to their respective medians since January 2017 at 21.1x and 33.7x. However, Canopy Growth and Cronos were trading at a discount to their respective medians of 134.9x and 89.4x since January 2017.

Trading at a discount

As we saw earlier in this series, the same four companies were trading at a discount to the peers’ median—Supreme Cannabis (FIRE)(SPRWF) at 21.3x, Hydropothecary (THCX) at 27.6x, Organigram (OGI) at 17.3x, and CannTrust (TRST) at 14.4x. These companies were also trading at a discount compared to their respective recent medians since January 2017 of 33.5x, 35.2x, 22.9x, and 23.8x, respectively.

For more information on this sector, please read Comparing Major Cannabis Players’ Prices and Cost Structures.

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