As of November 8, Innovative Industrial Properties (IIPR) was trading at $85.22, which represents an increase of 17.4% since its third-quarter earnings release on November 6. In the quarter, the company beat analysts’ revenue and EPS estimates by 8.0% and 14.6%, respectively. The impressive third-quarter performance boosted the company’s stock.
IIPR’s forward EV-to-sales multiple
IIPR’s stock price surge also raised its valuation. As of November 8, IIPR’s forward EV-to-sales multiple was 13.94x, compared with 12.51x on November 6. Its historical average is 9.21x. However, some of its valuation gain was offset by analysts raising their revenue estimate after its earnings release. As of Friday, analysts expect the company to report revenue of $79.7 million in the next four quarters, up from $73.6 million. IIPR’s revenue beat, along with its acquisition of 484,000 square feet of industrial property for $158.8 million in the fourth quarter, may have prompted analysts’ higher forecast.
The company’s higher operating profits may also have been behind its higher valuation. On November 8, peers OrganiGram Holdings (OGI), Aphria (APHA), and Cronos Group (CRON) had forward EV-to-sales multiples of 3.59x, 2.16x, and 8.20x, respectively.
IIPR’s forward EV-to-EBITDA multiple
As of November 8, IIPR’s EV-to-EBITDA multiple was 16.96x, compared with 14.06x on November 6. Its historical average is 11.11x. IIPR’s stock price surge appears to have rased its forward EV-to-EBITDA multiple. Despite raising their revenue estimate for IIPR, analysts kept their EBITDA estimate at $65.48 million for the next four quarters. Meanwhile, OGI’s, Aphria’s, and Cronos’s EV-to-EBITDA multiples were 10.19x, 13.0x, and -52.8x on Friday, respectively.
Year-to-date stock performance
This year, IIPR stock has outperformed broader equity markets and peers, returning 87.8%. The company’s strong second- and third-quarter performance appears to have boosted its stock. In comparison, OGI, Aphria, and Cronos have fallen 0.6%, 14.1%, and 21.7% this year, respectively. The S&P 500 has risen 23.4%.