Aurora Cannabis (ACB) has traded at a premium valuation compared to its peers since the beginning of this year. Currently, the stock is trading at a forward EV-to-sales multiple of 14.5x, which is higher than its peers’ median multiple of 6.3x.
Similar to Aurora Cannabis, a handful of its peers have continued to trade at a premium to the median. The companies include Canopy Growth (WEED), Cronos Group (CRON), and Tilray (TLRY). As of June 6, these stocks were trading at forward multiples of 19.0x, 36.0x, and 10.0x.
When we eyeball the trend in Aurora Cannabis’ valuation multiple in the above chart, it appears to be right in the middle of its high and low range. Compared to the historical period, the stock is trading at a premium to its average of 10.9x. We must consider the periods with higher valuations after developments towards recreational cannabis moved ahead in Canada.
Comparing Aurora Cannabis to its peers’ median and past levels, the stock doesn’t appear relatively cheap. However, Aurora Cannabis is one of the top five cannabis companies, which could be leading investors to pay a premium on the stock.