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What to Expect from Charlotte’s Web Holdings’ Q4 Earnings

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Charlotte’s Web Holdings

Charlotte’s Web Holdings (CWBHF) is slated to release its fourth-quarter earnings on March 28. The company’s revenues are expected to rise to $23.0 million in the quarter as compared to $17.74 million in the sequential quarter. In the full year 2018, Charlotte’s Web Holdings’ revenues are expected to be ~$70 million. Analysts polled by Thomson Reuters expect its revenues to rise to $155 million in 2019.

Profitability metrics

Charlotte’s Web Holdings is expected to post EBITDA of $7.5 million in the fourth quarter as compared to $5.4 million in the third quarter. The company’s EBITDA is expected to rise to $53.3 million in 2019 from $23 million in 2018. Charlotte’s Web Holdings’ earnings per share are expected to double on a quarter-over-quarter basis to $0.06 in the fourth quarter. While some observers see big returns from cannabis companies, others like Jeffrey Gundlach have a pessimistic view of the sector.

Valuation

For cannabis companies, the enterprise value to revenue multiple is the preferred valuation multiple, as most of the companies in this space are yet to achieve profitability. Charlotte’s Web Holdings is valued at an enterprise value to revenue multiple of 10.7x its 2019 expected revenues and 6.0x its 2020 consensus revenues. Aurora Cannabis (ACB) is valued at an enterprise value to revenue multiple of 24.7x its 2019 consensus revenues and 10.9x its 2020 expected revenues.

Canopy Growth (WEED) and HEXO (HEXO) have 2019 enterprise-value-to-sales multiples of 24.4x and 9.3x, respectively. Read How Cannabis Stocks’ Valuations Stack Up amid Recent Weakness for more analysis.

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