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Do WEED, ACB, TLRY, and APHA Look Attractive at These Valuations?

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Comparable multiples

The recent movement in stock prices for cannabis players (HMMJ) also impacts valuation multiples. Below, we’ll discuss how the valuation multiples for six cannabis stocks compare against their historical average as well as against their peers’ median.

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Trading at a premium

In the above chart, four stocks were trading at a premium to peers’ (MJ) median forward EV-to-sales multiple of 7.0x as of March 22. Canopy Growth (WEED) was trading at a premium multiple of 19.8x compared to the median, and it was also trading at a premium to its historical average of 14.4x.

Next is Aurora Cannabis (ACB) at 14.4x, which is also trading at a premium to the median as well as its historical average of 10.2x. Cronos Group (CRON) was trading at a multiple of 41.0x above its historical average of 21x, and Tilray (TLRY) was trading at a premium to the peer median at 18.3x. However, Tilray was trading at a discount compared to its historical average of 54.2x on March 22. Usually, when a stock trades at a premium to the peers’ median and their historical average, they are considered less attractive.

As the above chart shows, two stocks were trading at a discount to the peer median including Aphria (APHA), which was trading at a forward multiple of 4.0x, and OrganiGram (OGRMF), which was trading at a forward multiple of 5.8x.

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