More Valuations for the Cannabis Sector in October



Forward EV-to-EBITDA

In the previous part of this series, we looked at the overall median forward EV[1. enterprise value]-to-sales valuation multiple for the nine Canadian cannabis companies we’re covering. That gave us a perspective on how low or high cannabis companies (HMMJ) are trading as of October 8.

Now let’s look at another valuation multiple, the EV-to-EBITDA ratio.

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Median level

In the above chart, the yellow line represents the median of nine Canadian cannabis companies. The median forward EV-to-EBITDA multiple on October 8 was 43.2x. That was 30% lower than 61.2x in September.

These multiples are in contrast to their EV-to-sales multiples, which is why it’s important to look at more than one valuation multiple.

The overall median, which is represented by the blue line, includes the nine Canadian cannabis companies as well as four US-listed companies that have exposure to cannabis-related products. The overall median for the month fell 40% to 22.5x on October 8 from 37.7x in September.

In the next part, we’ll look at the monthly changes in valuation multiples for our nine companies, including Canopy Growth (CGC) (WEED), Aurora Cannabis (ACB) (ACBFF), and Tilray (TLRY).


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