Comparing valuation multiples
As of March 22, the median forward EV-to-sales multiple of our select group of 12 cannabis players was 7.0x. There were a couple of cannabis stocks (HMLSF) that were trading at a discount to the peer median. Let’s look at these stocks.
Trading at a discount
In the above chart, we see that four stocks were trading at a discount to the peer median on March 22. These stocks include HEXO (HEXO), which was trading at 6.0x. However, HEXO was trading slightly higher compared to its historical average of 5.8x in the past two years. Supreme Cannabis (SPRWF) was another company that was trading at a discount to the median at 4.3x. The stock was also trading at a discount to its historical average of 6.3x.
Green Thumb Industries (GTBIF) and KushCo Holdings (KSHB) were both trading at a discount to the peer median at 4.7x and 2.4x, respectively. Both these stocks were also trading at a discount to their respective historical average of 6.1x and 3.4x on March 22.
Compared to these four stocks, Innovative Industrial Properties (IIPR) was trading at a premium to peers’ median at 17.9x and compared to its historical average of 10.0x. CannTrust (CTST), on the other hand, was trading right at the peer median at 7.0x on March 22. The stock’s valuation multiple was also above its historical average of 6.2x.
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.
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