As we near the end of the first month of 2019, it’s time to look at the valuation multiples of cannabis stocks and determine which ones look cheap.
In this series, we’ll present two forward multiples—EV-to-sales (enterprise value-to-sales) and EV-to-EBITDA—for the cannabis stocks under review. We’ll take a look at how each stock compares to the industry average, and we’ll also compare each stock’s valuation multiples month-over-month to get a sense of how cheap it is compared to a month ago.
Cannabis stocks’ YTD performances
Before we get into the details of these stocks’ valuation multiples, let’s look at how they’ve been doing so far this year. In the chart above, we can see that most cannabis stocks have risen since the beginning of 2019. Canopy Growth (WEED) (CGC) has emerged as the top gainer so far in 2019 with a rise of almost 50% YTD (year-to-date). HEXO (HEXO) is also among the top five gainers this year with its 32.8% rise as of January 18. Cronos Group (CRON) is third on the list with its rise of 31.7% YTD.
Cannabis stocks that have also been in positive territory YTD include Aurora Cannabis (ACB) with a rise of 20%, CannTrust (CNTTF) with a rise of nearly 16%, and Supreme Cannabis (SPRWF) with a rise of ~15%. OrganiGram Holdings (OGRMF) is also up nearly 11.8% YTD.
Tilray (TLRY) is also up nearly 9.6% YTD, followed by Aphria (APHA)—one of the first major cannabis companies to report its earnings results this year—which has risen nearly 9% YTD. Read Key Takeaways from Aphria’s Second-Quarter Earnings to learn more. Emerald Health (EMHTF) is the only cannabis company to have fallen YTD. It’s down 11.3%.
Now that we have a sense of where these cannabis stocks (HMMJ) are situated so in 2019, let’s take a closer look at their valuations.