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Comparing ACB, APHA, and CRON’s Valuations

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

Cronos Group looks expensive

So far, Cronos Group (CRON) has delivered a 13% return in June. The company struggled to remain in the positive territory in the previous three months due to its high valuation.

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Peers’ valuations

In the above chart, Cronos Group was trading at a forward EV-to-EBITDA multiple of 192x, which was significantly higher than its historical level of 22.6x. The level was also significantly higher than the peer median of 19x as of June 19.

Canopy Growth (WEED), Aurora Cannabis (ACB), and Aphria (APHA) were also trading at a premium to the peer median at forward multiples of 55x, 60x, and 47x. The cannabis industry is relatively new. The EBITDA will have high volatility, which makes the metric less reliable. These companies’ valuation multiples look relatively high compared to the market averages.

However, the industry is in a high growth stage with new markets opening each day. Read What Would Legalization in New York State Mean for Cannabis? to learn more.

In contrast to these stocks, OrganiGram (OGI) was trading at a forward EBITDA multiple of 14.7x, which was lower than the peer median of 19x and the company’s historical average level of 18.5x.

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