Comparing valuation multiples
As of April 9, the median forward EV-to-sales multiple of our select group of 12 cannabis players was about 6.2x. The popular cannabis stocks including Canopy Growth (WEED), Aurora Cannabis (ACB), and Tilray (TLRY) continued to trade at a premium to this median, but what about the lesser-known stocks? Most of these stocks (MJ) are trading at a discount to the peer median as we’ll discuss below.
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Trading below median
As the above chart shows, five stocks were trading at a discount to the peer median on April 9. These stocks include CannTrust (CTST), which was trading below the peer median at 3.8x. The stock’s valuation multiple was also below its historical average of 6.2x. CannTrust stock particularly took a beating after its disappointing earnings.
Supreme Cannabis (SPRWF) was another cannabis stock that was trading at a discount to the median at 3.8x. The stock was also trading at a discount to its historical average of 6.2x. HEXO (HEXO) was trading at 5.6x below the peer median of 6.2x. However, HEXO was trading close to its historical average of 5.8x over the past two years.
KushCo Holdings (KSHB) and Green Thumb Industries (GTBIF) were both trading at a discount to the peer median at 2.6x and 3.9x, respectively. Both these stocks were also trading at a discount to their respective historical averages of 3.5x and 5.2x on April 9.
Compared to these stocks, Innovative Industrial Properties (IIPR) was trading at a premium to the peer median at 17.6x and compared to its historical average of 10.2x.