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Cannabis Sector: Are Investors Confident?


Jun. 20 2019, Updated 12:50 p.m. ET

Forward EBITDA multiple

Previously, we discuss the cannabis sector’s forward EV-to-sales multiple. Now, we’ll discuss the forward EV-to-EBITDA multiple.

The cannabis sector’s current forward EV-to-EBITDA multiple is trading at a median of 19x, which has largely moved sideways over the past few months. Similar to the sales multiple discussed earlier, the current EBITDA multiple was also trading at the lowest level since January 2017. The peer median includes companies like Cronos Group (CRON), Aphria (APHA), and others.

The multiple reached a peak from July to October last year when Canada legalized recreational cannabis. The hype didn’t meet the expectations. Investors have less confidence in the cannabis sector.

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While the cannabis sector’s valuation has drifted sideways, the companies in the cannabis sector continue to announce increased activity and engagement in the domestic and international market. On June 18, New Age Beverages (NBEV) announced that it will launch its CBD product portfolio in Hong Kong. To learn more, read NBEV to Sell Its CBD Products in Hong Kong. Canopy Growth (WEED) discussed its progress in the international market. To learn more, read Canopy Updates on Europe, Australia, and Africa.


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