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

Do CGC, ACB, TLRY, and APHA Look Cheap?


Dec. 4 2020, Updated 10:52 a.m. ET

Defining “cheap”

In this series, we’re mainly discussing valuation multiples to help us determine whether cannabis stocks look cheap or attractive. In the previous part, we discussed the median multiple for nine cannabis peers. In this part, we’ll compare the valuation levels for four cannabis stocks (HMMJ) with the median and their respective historical average.

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How are the stocks faring?

With the exception of Aphria (APHA), each of the three stocks in the above chart was trading at a premium to the peer median EV-to-EBITDA multiple as of February 22. Tilray (TLRY) was trading at a significant premium of 802x compared to the peer median of 25.1x. Tilray was also trading at a premium to its own historical average of 577x. These multiples indicate the significant premium that investors are paying per unit of EBITDA for Tilray stock, which might not be sustainable.

Canopy Growth (WEED) (CGC) was also trading at a significant premium of 233x compared to the median and its historical average of 98x. Aurora Cannabis (ACB) was trading at 36x compared to its historical average of 31.6x. Aurora Cannabis was also trading at a premium to the peer median. Aphria (APHA) was trading right at the peer median of 25.1x. However, Aphria was trading at a discount to its historical average of 29.6x.

Next, we’ll discuss the other five stocks that make up the peer median.


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