uploads///Forward EV to Sales

Does Cronos Group Look Expensive Compared to Its Peers?


Dec. 4 2020, Updated 10:51 a.m. ET

Cronos Group’s valuations

Cronos Group (CRON) has been on a declining trend for a while. The stock rose to a peak of ~30 Canadian dollars in February. The stock’s valuations are still a concern.

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Valuation multiples

Historically, Cronos Group has traded well above its peers. The stock might be rich. The stock could have a higher potential compared to its peers or lower risk. Cronos Group is among the very few companies with the backing of a US giant like Altria, which could justify the assumption of higher growth compared to its peers. Canopy Growth (WEED) is backed by Constellation Brands.

The stock was trading at a forward EV-to-sales multiple of 29.1x, which was much higher than its peers’ median of 5.9x and its historical average of 21.6x. Canopy Growth had a multiple of 23.2x, while Aurora Cannabis (ACB) had a multiple of 15.2x. Aphria (APHA) was trading at a multiple of 3.2x, which was even lower than its peers’ median (MJ). With both of these companies demonstrating strong fundamentals, Cronos Group’s valuations appear relatively rich, which might explain why the stock has been taking a beating.


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