Aphria’s (APHA) valuation has taken a beating. The company came under fire from short sellers due to its investment activities in Latin America. Aphria’s valuation multiples have been diverging from the peer median.
Aphria was trading at a forward EV-to-Sales multiple of 3.4x, which was at a significant discount to the peer median of 6.6x as of June 24. On average, Aphria has traded at a forward multiple of 3.7x in 2019. The current multiple shows an extension of weakness in recent months.
Supreme Cannabis and CannTrust (CTST) were also trading at a discount to the peer median at 3.7x and 3.8x as of June 24. In contrast, Cronos Group (CRON), Canopy Growth (WEED), and Tilray (TLRY) were trading on the opposite end of the spectrum at 21x, 11.6x, and 26x, respectively.
Companies that consistently trade at a discount to the peer median are considered to be relatively weaker in terms of growth prospects and carrying higher risk.