Up-Down-Up-Down: Canadian Cannabis Volatility Continued Last Week -

Up-Down-Up-Down: Canadian Cannabis Volatility Continued Last Week

Nov 19, 2023Jeremy ParkinsonFinance0

Image sourceThe volatility continues! The 5 constituents in munKNEE’s Canadian Cannabis LPs Index were up 1.8% last week after having gone down the previous week, up 12,5% the week before that and down 3.9% the week before that. Below are the performances of the constituents in the Index last week, in descending order, and for the previous week along with each stock’s forward-price-to-sales ratio (PSR), and enterprise value-to-earnings before interest, taxes, depreciation and amortization (EV/EBITDA) ratio to provide a comparative valuation of each, where applicable, plus the latest news on each company. A definition of each ratio is at the end of the article.Canadian Cannabis LPs Index

Cronos Group (CRON): down 4.9% last week; up 10.8% the previous week

Forward Price-to-Sales Ratio (PSR): 8.5 (Very High – 145.6% above the sector mean of 3.5)
EV/EBITDA ratio: NA
Latest News: Cronos Q3 Financial Results Are Impressive

Organigram Holdings (OGI): up 2.4% last week; up 6.0% the previous week

Forward Price-to-Sales Ratio (PSR): 0.9 (73.7% below sector mean of 3.6)
EV/EBITDA ratio: 9.0 (29.7% below the sector mean of 12.8)
Latest News: Organigram Announces C$124.6 Million Investment from BAT and Creation of “Jupiter” Strategic Investment Pool

Aurora Cannabis (ACB): down 2.1% last week; down 4.1% the previous week

Forward Price-to-Sales Ratio (PSR): 1.1 (68.1% below sector mean of 3.6)
EV/EBITDA ratio: 23.2 (Very High – 81.4% above sector mean of 12.8)
Latest News: Aurora Cannabis’ Q2 Net Income Was Positive For The First Time

Tilray Brands (TLRY): up 9.6% last week; down 12.6% the previous week

Forward Price-to-Sales Ratio (PSR): 1.6 (53.7% below sector mean of 3.6)
EV/EBITDA ratio: 20.3 (High – 58.7% above sector mean is 12.8)
Latest News:
- Tilray CEO Doesn’t Think Rescheduling Marijuana in U.S. Will Help Canadian Pot Stocks
- Tilray Brands Expands Cannabis Beverage Portfolio

Canopy Growth (CGC): up 5.8% last week; down 17.5% the previous week

Forward Price-to-Sales Ratio (PSR): 1.8 (48.5% below sector mean of 3.6)
EV/EBITDA ratio: NA
Latest News: Canopy Growth Q2 Financials Show Improvement

LP Stock Performance SummaryIndex Average: up 1.8% last week, down 1.7% the previous week and now down 47.2% YTD.Valuation Metrics To evaluate these companies, investors often look at these key ratios, among others:

The price-to-sales ratio (PSR) indicates the price paid for a share relative to the revenue that share generates, helping assess if a stock is valued appropriately. The mean forward PSR for the EDA Software Sector is 2.5 and is considered excellent when the value falls below two (2). The mean forward PSR for the Health Care/Pharmaceuticals sector is 3.6.

The Enterprise Value-to-Earnings Before Interest, Taxes, Depreciation, and Amortization ratio (EV/EBITDA) ratio considers a company’s total value, including debt and equity, relative to its earnings before interest, taxes, depreciation, and amortization, giving investors insight into profitability across companies. A high means the company is overvalued, while a low ratio indicates it’s undervalued. The mean forward EV/EBITDA ratio for the Health Care/Pharmaceuticals sector is 12.8.

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