Since Canopy Growth (NYSE:CGC)(TSE:WEED) and Aurora Cannabis aren’t profitable yet, we considered the forward EV-to-sales multiple and forward EV-to-EBITDA multiple for our analysis.
As of April 9, Canopy Growth was trading at a forward EV-to-sales multiple of 8.31x compared to 10.66x at the beginning of the year. The decline in the stock has dragged the company’s valuation multiple down. However, the decline in analysts’ revenue estimates for the next four quarters offset some of the declines. As of April 9, analysts expect the company to report revenue of 698.9 million Canadian dollars in the next four quarters. The amount is lower than their expectation of 728.9 million Canadian dollars at the beginning of 2020. Analysts lowered their revenue estimates due to the delay in introducing cannabis-infused beverages, closing some cultivation facilities, and weaker-than-expected demand for Cannabis 2.0 products.
Aurora Cannabis was trading at a forward EV-to-sales multiple of 4.40x as of April 9—a decline from 5.15x at the beginning of 2020. The decline of 50% in the company’s stock price has dragged its valuation multiple down. Meanwhile, the decline in analysts’ revenue expectations for the next four quarters has lowered the company’s valuation multiple. As of April 9, analysts projected that the company will report revenue of 415.2 million Canadian dollars in its next four quarters. The amount is a big drop from their estimates of 686.3 million Canadian dollars at the beginning of 2020. Pricing pressure and weaker demand might have prompted analysts to lower their estimates.
View more information: https://marketrealist.com/2020/04/comparing-canopy-growth-aurora-cannabiss-valuation-multiples/