Comp tables as of March 23, 2020: Multiples bottom at reasonable valuations

Average trading multiples for U.S.-focused operators expanded to 1.7X 2020 sales and 8.1X 2020 EBITDA from last week’s 1.6X and 7.1X, respectively.

Canada-focused operators still trade at a premium on sales compared to U.S. operators, despite a smaller market and lower margins, but now trade in line on EBITDA, at 3.5X 2020 sales and 8.1.7X 2020 EBITDA, compared with last week’s 3.5X and 7.7X, respectively.

The only problem with saying they trade in line is that most of the Canadian operators don’t have positive EBITDA to even calculate the multiple – supporting our contention that the U.S.-focused operators are fundamentally more attractive.

For the U.S. operators, 12 of the 17 on our sheet have an EBITDA multiple for 2020, while only four of the 17 Canadian operators have a multiple.

While these valuations are low compared to past weeks, they are reasonable for normal industrial- and consumer-focused companies.

The average stock price for U.S.-focused vertically integrated operators increased 22% for the week and remains down 57% year to date, while the average for Canadian-focused vertically integrated operators increased 14% for the week and remains down 58% year to date.

For context, the S&P 500 declined 7% for the week and is down 31% year to date.

As we noted in our commentary on the correction, cannabis stocks are “high beta,” meaning they will move more than the market in both good times and bad.

Also note that Charlotte’s Web is now pro forma for its Abacus acquisition on both the capital structure and the estimates by combining consensus for the two companies.

These comp tables provide a benchmark for private investors to evaluate existing and future investments and a way for companies to judge their own valuations for current and future capital raises, as well as a menu for public investors to peruse.

Tracking the multiples and estimates over time can show how the returns of the stock are decomposed in changes in expectations (sales and EBITDA estimates) and the cost of capital (i.e., multiples applied to those estimates).

The shares outstanding and net debt levels for most companies have been adjusted for future dilution by including in-the-money warrants, options, convertible debt and shares to be issued in pending acquisitions.

The comp tables organize companies into groups based on the main business model (U.S.-focused vertically integrated operators, Canada-focused vertically integrated operators, hemp/CBD, pharmaceutical and ancillary products and services).

These tables also list the equity market capitalization, enterprise value (EV), sales and EBITDA estimates as well as the EV/sales and EV/EBITDA multiples on those projections.

Everything is converted, calculated into and listed as U.S. dollars.

Nonmeaningful outliers are removed before the averages by group are calculated.

These comp tables compute enterprise value as the greater of market capitalization or market capitalization plus net debt.

This is a middle road. It does not penalize companies that have high gross debt and high gross cash levels, but it also reflects that companies with high net cash levels will be using that cash in their operations.

Are there companies missing from this table? A metric you believe is relevant to include? A feature you’d like to see?

Email us at [email protected] and let us know.

Download the PDF or the sortable excel spreadsheet for more details about each company, including estimates for 2020 and 2021.

Priced as of March 23, 2020.

Name Ticker Market Cap Enterprise Value EV/Sales 2020E EV/EBITDA 2020E Sales 2020E Sales Growth 2020E EBITDA Margin 2020E
US-Focused Vertically Integrated Operators
4Front Ventures Corp. FFNTF  $          132  $             178 n.m. n.m.  n.m. n.m. n.m.
Acreage Holdings ACRGF  $          234  $             234 0.8X n.m.  $        289 86% 1%
Cansortium CNTMF  $               7  $               97 1.0X 3.9X  $           95 215% 27%
Columbia Care CCHWF  $          405  $             405 1.8X n.m.  $        220 184% -6%
Cresco Labs CRLBF-US  $       1,311  $         1,311 2.5X 12.4X  $        518 294% 20%
Curaleaf Holdings CURLF  $       2,273  $         2,355 2.9X 10.6X  $        803 265% 28%
Green Thumb Industries GTBIF  $       1,029  $         1,090 2.3X 9.2X  $        464 114% 26%
Harvest Health & Recreation HRVSF  $          492  $             685 1.2X 7.2X  $        583 388% 16%
iAnthus Capital Holdings ITHUF  $             91  $             195 0.9X 6.3X  $        220 153% 14%
Liberty Health Sciences LHSIF  $             99  $             102 n.m. n.m.  n.m. n.m. n.m.
Medicine Man Technologies MDCL  $          116  $             225 1.5X 5.7X  $        151 5% 26%
MedMen Enterprises MMNFF  $          118  $             617 2.5X n.m.  $        242 51% -23%
MJardin Group MJARF  $               8  $             145 3.4X 27.1X  $           43 84% 12%
Planet 13 Holdings PLNHF  $          124  $             124 1.3X 4.5X  $           93 46% 29%
Slang Worldwide SLGWF-US  $             31  $               31 0.3X 1.6X  $        111 375% 17%
Trulieve Cannabis Corp. TCNNF  $          813  $             886 2.2X 5.7X  $        397 58% 39%
Vireo Health International VREOF  $             35  $               35 0.4X 2.6X  $           85 203% 16%
Average – US-Focused Vertically Integrated Operators  $          430  $             513 1.7X 8.1X  $        288 168% 16%
Name Ticker Market Cap Enterprise Value EV/Sales 2020E EV/EBITDA 2020E Sales 2020E Sales Growth 2020E EBITDA Margin 2020E
Canada-Focused Vertically Integrated Operators
48North Cannabis Corp. NCNNF  $             12  $               12 0.6X n.m.  $           20 150% -11%
Aphria APHA-TSE  $          685  $             724 1.6X 15.9X  $        442 52% 10%
Aurora Cannabis ACB  $          935  $         1,236 4.7X n.m.  $        261 32% -22%
Auxly Cannabis Group XLY-CNQ  $          129  $             133 2.3X n.m.  $           57 n.m. -9%
CannTrust Holdings TRST-CA  $             84  $               84 n.m. n.m.  n.m. n.m. n.m.
Canopy Growth Corp. CGC  $       4,670  $         4,670 9.8X n.m.  $        477 71% -41%
Cronos Group CRON  $       1,917  $         1,917 17.3X n.m.  $        111 224% -37%
Emerald Health Therapeutics EMHTF  $             21  $               37 n.m. n.m.  n.m. n.m. n.m.
Flowr Corp. FLWPF  $             27  $               27 0.5X n.m.  $           51 992% -8%
The Green Organic Dutchman Holdings TGODF  $             57  $               57 2.6X n.m.  $           22 169% -69%
GTEC Holdings GTEC-TSX  $               8  $               11 n.m. n.m.  n.m. n.m. n.m.
Harvest One Cannabis HRVOF  $               6  $                 7 0.5X n.m.  $           13 51% -52%
Hexo Corp. HEXO  $          173  $             173 2.1X n.m.  $           82 81% -34%
Organigram Holdings OGI  $          253  $             274 2.3X 8.9X  $        118 61% 26%
Tilray TLRY  $          462  $             772 3.1X n.m.  $        246 47% -28%
Village Farms International VFF  $          132  $             208 0.9X 4.2X  $        232 23% 21%
WeedMD WMD-CA  $             39  $               60 0.8X 3.5X  $           77 323% 22%
Average – Canada-Focused Vertically Int. Ops.  $          565  $             612 3.5X 8.1X  $        158 175% -17%
Name Ticker Market Cap Enterprise Value EV/Sales 2020E EV/EBITDA 2020E Sales 2020E Sales Growth 2020E EBITDA Margin 2020E
Hemp / CBD
cbdMD YCBD  $             43  $               43 0.7X n.m.  $           65 109% -5%
Charlotte’s Web Holdings CWBHF  $          455  $             455 2.6X 33.5X  $        178 62% 8%
CV Sciences CVSI  $             53  $               53 1.7X n.m.  $           32 -41% -26%
Elixinol Global ELLXF  $             17  $               17 1.0X n.m.  $           17 -6% -53%
Emerald Health Therapeutics EMHTF  $             21  $               37 n.m. n.m.  n.m. n.m. n.m.
Green Growth Brands GGBXF  $             16  $             115 1.0X n.m.  $        117 165% -17%
Neptune Wellness Solutions NEPT-CA  $          109  $             109 1.9X n.m.  $           59 177% -2%
Average – Hemp / CBD  $          102  $             119 1.5X 33.5X  $           78 78% -16%
Name Ticker Market Cap Enterprise Value EV/Sales 2020E EV/EBITDA 2020E Sales 2020E Sales Growth 2020E EBITDA Margin 2020E
Pharmaceutical
Arena Pharmaceuticals ARNA  $       2,068  $         2,068 n.m. n.m.  $             7 -99% n.m.
Cara Therapeutics CARA  $          518  $             518 26.7X n.m.  $           19 -2% n.m.
Corbus Pharmaceuticals Holdings CRBP  $          349  $             349 40.1X n.m.  $             9 -76% n.m.
GW Pharmaceuticals GWPH  $       2,470  $         2,470 4.6X n.m.  $        536 72% -4%
MediPharm Labs Corp. MEDIF  $          178  $             178 1.4X 5.1X  $        129 40% 27%
Ultragenyx Pharmaceutical RARE  $       2,277  $         2,277 12.7X n.m.  $        180 73% n.m.
Zynerba Pharmaceuticals ZYNE  $             86  $               86 n.m. n.m.  $            – n.m. n.m.
Average – Pharmaceutical  $       1,135  $         1,135 17.1X 5.1X  $        126 1% 11%
Name Ticker Market Cap Enterprise Value EV/Sales 2020E EV/EBITDA 2020E Sales 2020E Sales Growth 2020E EBITDA Margin 2020E
Ancillary Products & Services
Akerna Corp. KERN  $             59  $               59 2.8X n.m.  $           21 69% -51%
Canopy Rivers CNPOF  $             80  $               80 2.8X 5.0X  $           29 124% 55%
Greenlane Holdings GNLN  $             73  $               73 0.4X n.m.  $        183 -2% -3%
GrowGeneration Corp. GRWG  $          126  $             126 0.9X 8.6X  $        137 72% 11%
Innovative Industrial Properties IIPR  $       1,011  $             837 7.8X 8.9X  $        108 141% 88%
KushCo Holdings KSHB  $             74  $               85 0.5X n.m.  $        183 21% -7%
MediPharm Labs Corp. LABS-CA  $          177  $             177 1.4X 5.1X  $        129 40% 27%
New Age Beverages Corp. NBEV  $             92  $             113 0.4X n.m.  $        257 1% -8%
Scotts Miracle-Gro Co. SMG  $       4,419  $         6,589 2.0X 11.2X  $     3,376 5% 17%
Supreme Cannabis Co. FIRE-CA  $             52  $             119 2.1X n.m.  $           57 70% -4%
The Valens Co. VGWCF  $          183  $             183 1.5X 3.5X  $        122 144% 43%
Average – Ancillary Products & Services  $          577  $             767 2.0X 7.0X  $        418 62% 15%

Source: FactSet financial data and analytics, company filings and Investor Intelligence analysis.