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Innovative Industrial Properties Has a High Valuation

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

Comparative analysis

On June 19, Innovative Industrial Properties (IIPR) gained nearly 5%. We’ll discuss the company’s current valuations compared to its peers.

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Higher valuation

Innovative Industrial Properties’ forward EV-to-sales multiple increased to 20.8x in June. The stock was trading at a significant premium to the peer median of 5.8x. The stock was also trading at a premium to its historical average of 11x. Unlike other cannabis stocks in the above chart, Innovative Industrial Properties is a REIT related to cannabis properties.

In contrast to Innovative Industrial Properties, all of the other stocks in the above chart were trading at a discount to the peer median and their respective historical average. HEXO (HEXO), which had disappointing earnings on June 12, was trading at 5.3x. The stock has traded at an average of 5.9x in the past. To learn more, read CIBC Lowers HEXO’s Ratings and Price Target after Earnings.

CannTrust (CTST) was also trading at a discount to the peer median at 3.3x, while Supreme Cannabis was trading at 3.3x. KushCo Holdings (KSHB) and Green Thumb Industries were trading at ~1.5x and 1.6x. The companies trading at a discount to their past levels indicates less confidence among investors.

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