What investors are paying
By knowing what investors are paying for each unit of the forward sales estimate for Cronos Group (CRON), HEXO (HEXO), and other companies, we’ll get a sense of whether the stocks are trading relatively cheap, expensive, or at fair value. The analysis is similar to what we saw for Canopy Growth (WEED), Tilray (TLRY), Aphria (APHA), and Aurora Cannabis (ACB) previously in this series.
In the above chart, the three stocks were trading at a discount to the peer median of 6.8x as of February 22. The stocks include OrganiGram (OGRMF), Supreme Cannabis (SPRWF), and HEXO. OrganiGram was trading at 4.3x its forward sales estimate. Supreme Cannabis was trading at 3.4x its forward sales estimate, while HEXO was trading at 6.2x its forward sales estimate. OrganiGram and Supreme Cannabis were also trading at a discount to their historical average of 5.8x and 6.3x, respectively. HEXO was trading at a premium to its historical average of 5.8x.
CannTrust (CNTTF) was also trading at a premium of 6.8x compared to its historical average of 6.2x. However, CannTrust was right where the peers’ median was as of February 22. In contrast to these companies (HMMJ), Cronos Group was trading at a forward multiple of 44.4x compared to its historical average of 20.0x. Altria’s stake in Cronos Group significantly increased its valuations.
Next, we’ll discuss these stocks based on the EV-to-EBITDA multiple.