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How Does Aurora Cannabis’s Valuation Compare with Peers?

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Comparing multiples

In March, Aurora Cannabis (ACB) was trading at a forward EV-to-EBITDA (enterprise value-to-earnings before interest, tax, depreciation, and amortization) of 59.7x. Aurora was trading at a significant premium to the peers’ median of 26.5x and compared to its historical average of 32.4x over the past two years. Let’s look at how Aurora’s peers were doing.

Cronos at a premium

In the chart above, we can see that Cronos Group (CRON) was trading at a forward EV-to-EBITDA multiple of 127x, which declined from 143x about two weeks ago. Cronos Group was also trading at a premium compared to its historical average of 8.6x over the last two years.

Trading at a discount

In contrast, Aphria (APHA) was also trading at a discount to the peers’ median at 24.2x, and the stock was trading at a discount to its historical average of 28.8x. Also, OrganiGram (OGRMF) was trading at a discount to the peer median at 15x, and it was also trading at a discount to its historical average of 18.8x.

Both Canopy Growth (WEED) and Tilray (TLRY) were trading at significant premiums to the peer median at 1,704x and 117x, respectively, on March 22. These figures appear to be on the extreme end of the spectrum, which makes it very difficult to use these valuation multiples for some of the stocks in the cannabis sector (MJ).

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