Today we introduce the first version of the MJBizDaily Investor Intelligence comp table, one of many new features we’ll be unveiling for Investor Intelligence subscribers.
This table will be updated weekly and available to download on the Investor Intelligence site.
As an allocator of capital judging multiple opportunities for your marginal dollar, you must be able to:
- Identify the relevant investment opportunities.
- Assess the current size and value of public players.
- Determine the valuation multiple applied by the market to public players.
This comp table provides a benchmark for private investors to evaluate existing and future investments as well as a menu for public investors to peruse.
It groups companies into groups based on the main business model (vertically integrated operators, hemp/CBD, pharmaceutical, and ancillary products and services) and lists the market capitalization, enterprise value (EV), sales estimates and EV/sales multiples on those sales projections.
Nonmeaningful outliers are removed before the averages by group are calculated.
Vertically integrated operators are trading at an average of 3.1X and 2.0X of 2020 and 2021 EV/sales, respectively, as of Aug. 19, 2019 – a reasonable multiple for any consumer packaged goods company.
By comparison, the Kellogg Co. trades at 2.4X 2020 sales despite being in a mature industry with flattish sales growth that is much less than the strong double digit growth expected for the cannabis sector.
Valuations fluctuate with movements in stock prices, changes to forward estimates and alterations to the capital structure (additional shares or debt). Thus, the table will be a living document updated not only with new prices each week but with new information and functionality.
In the coming weeks, as business models and the industry evolve, we will start to adjust for pro forma estimates and capital structures for acquisitions and capital raises, new companies and regroupings.
Longer term, we plan to provide additional tables on new relevant metrics, charts of historical valuation trends as well as proprietary metrics.
We also want your feedback on other improvements we can make to best help you, the cannabis investor. Are there companies missing from this first pass to add? A metric you believe is relevant to include?
Email us at investorintelligence@mjbizdaily.com and let us know.
