uploads///Forward EV to Sales

Analyzing Green Thumb Industries’ Valuations


Apr. 24 2019, Published 8:12 a.m. ET


In April, analysts turned more bullish on Green Thumb Industries (GTBIF) (GTII) with a consensus target price upgrade to 28.2 Canadian dollars from 26.2 Canadian dollars a month ago. Analysts maintained a “buy” rating. We’ll discuss the stock’s valuations to get a sense of how it compares with its peers.

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EV-to-sales multiple

In the above chart, the peers’ median (MJ) is made up of median valuation multiples of 12 cannabis stocks as indicated in the footnote of the chart. The current median level was trading at 5.8x, while Green Thumb Industries was trading much lower at 2.1x as of April 23. KushCo Holdings (KSHB) was also trading at a discount to the median at 1.9x. Both of these stocks have traded at a discount to the peers’ median since the beginning of 2019. Green Thumb Industries traded at a significant discount to its historical average of 5.3x over the past two years.

Usually, when stocks consistently trade at a discount to the peers, it indicates that they’re relatively riskier or pose lower growth opportunities compared to their peers. To get a sense of the stocks that are trading above the peers, Canopy Growth (WEED), Aurora Cannabis (ACB), and Tilray (TLRY) were all trading at a premium to the median at 22.8x, 15.0x, and 12.8x. These companies have massive operations, which makes them relatively more attractive compared to smaller and emerging cannabis companies (MJ).


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