uploads///Forward EV to Sales

Aurora Cannabis: Is Its Valuation Attractive?




Aurora Cannabis (ACB) was trading at a forward EV-to-sales multiple of 14.5x on April 2. The company was trading at a premium to its historical two-year average of 10.2x. Aurora Cannabis was also trading at a premium to its peers’ median of 6.2x. The median averaged 12 peer companies (MJ) including Canopy Growth (WEED), HEXO (HEXO), Tilray (TLRY), and others.

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Trading at a premium

In the above chart, you can see that Aurora Cannabis has consistently traded above the peers’ median since February of 2018, which indicates better-than-average fundamentals for the company.

We also looked at the forward EV-to-EBITDA multiple. Aurora Cannabis was trading at a premium of 59x compared to peers’ median of 24x. Compared to the two-year historical average of 32.4x, Aurora Cannabis was also trading at a premium.

Is Aurora Cannabis attractive at these prices?

The premium valuations make Aurora Cannabis less attractive at the current prices. However, the premium valuation could also indicate that the market sees Aurora Cannabis as less risky compared to other cannabis players. The company might have a higher promise of growth in the near term.


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