Cannabis Industry Chart Of The Week: Market Rewards Lower Growth-Adjusted Multiples

July was a difficult month for MSO stocks; the best performing was up less than 2% while the worst was down over 15% on the month. The winners vs losers were not random however.

• The graph shows the one-month stock price performance (orange line) on the right axis. The green bars show the beginning of the month consensus EV/2022 EBITDA multiples divided by consensus 2021-2022 revenue growth.

• Viridian’s Equity Research reports have been been highlighting the superior value of stocks with lower Growth Adjusted EBITDA multiples and the our top value pick, AYR, was the best performing MSO of the month. Another value pick Verano, was the second-best performer of the month.

• One notable outlier on the graph is GTI, which had the highest growth adjusted EV/EBITDA multiple at the beginning of the period but still performed 4th best of the group. We attribute this performance to two factors: a flight to perceived safety in a down market, and recent acquisitions whose growth potential was not yet registered in the analyst estimates at the beginning of July.

• As the earnings reports due out this week provide a catalyst for better market performance, investors should look to increase their allocations to the better value inherent in the lower growth adjusted multiple MSOs.

The Viridian Capital Chart of the Week highlights key investment, valuation and M&A trends taken from the Viridian Cannabis Deal Tracker.

The Viridian Cannabis Deal Tracker is a proprietary information service that monitors capital raise and M&A activity in the legal cannabis and hemp industry. Each week the Tracker aggregates and analyzed all closed deals and segments each according to key metrics:

• Industry Sector (one of 12 sectors, from Cultivation to Brands)

• Dollar value of the transaction

• Region in which the deal occurred (country or U.S. state)

• Status of the company announcing the transaction (Public vs. Private)

• Deal structure (equity vs. debt)

• Key deal terms (Pricing and Valuation)

The Viridian Cannabis Deal Tracker provides the market intelligence that cannabis companies, investors, and acquirers utilize to make informed decisions regarding capital allocation and M&A strategy.

 Since its inception in 2015, the Viridian Cannabis Deal Tracker has tracked and analyzed more than 2,500 capital raises and 1,000 M&A transactions totaling over $50 billion in aggregate value.

The preceding article is from one of our external contributors. It does not represent the opinion of Benzinga and has not been edited.

Más contenido sobre cannabis en Español en El Planteo.