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

Valuations of CRON, HEXO, and Others : Which Stocks Look Cheap?



The remaining five cannabis stocks

In the previous article, we discussed the EV-to-sales (enterprise value-to-sales) multiples of four cannabis stocks and compared those multiples to the industry median. In this article, we’ll look at the other five stocks that make up the industry median multiple.

In the chart above, we can see that of the five remaining stocks, only Cronos Group (CRON) is trading at a premium to the industry median (HMMJ) EV-to-sales multiple as of January 18, while the remaining four are at or below the median.

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To put this in perspective, Cronos Group was trading at a multiple of 30.0x compared to the median of 4.95x. On the other hand, HEXO’s (HEXO) valuation multiple was the same as the median at 4.95x, while OrganiGram Holdings (OGRMF), CannTrust (CNTTF), and Supreme Cannabis (SPRWF) were trading at multiples of 3.4x, 4.2x, and 3.3x, respectively.

Investors’ sentiments about these five stocks have been mostly positive month-over-month, as has been indicated by the increases in their valuation multiples this month compared to about a month ago. Once again, the increases in their valuation multiples were largely driven by notable increases in their EVs, which in turn were driven by the rises in their share prices month-over-month.

In the remaining articles, we’ll look at another valuation multiple—EV-to-EBITDA—to confirm what we’ve discussed so far in this series. It’s important not to rely on just one indicator when making an investment decision.


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