Weekly Credit Tracker
Credit ratings are not currently available for public cannabis companies leaving companies, lenders and investors with a gap of information. The Viridian Cannabis Credit Tracker fills this gap. The model uses 11 market and financial statement variables to discern 4 key credit factors: Liquidity, Leverage, Profitability, and Size, to provide credit/liquidity analysis for over 370 public Cannabis/Hemp companies.
Weekly Credit Report – The Credit Quality of U.S. Cannabis Companies with No Analyst Coverage
- The Chart below shows our credit rankings for the 15 largest U.S. cultivation and retail sector companies with no sell-side analyst coverage. The exercise demonstrates the robustness of the Viridian Credit Tracker Methodology, which can render solid rankings without reference to projected revenues or EBITDA.
- Number 1 and 2 Grown Rogue and Cansortium are not controversial. They both rank pretty highly, even in a group of much larger companies with analyst coverage. However, #3 is certainly unexpected. IAnthus, the product of a restructuring that virtually wiped out the old equity, scores high on size and profitability, mitigating its #5 rankings on both liquidity and leverage.
- The graph below somewhat corroborates the credit rankings by providing a market-based estimate of asset value coverage. Note that iAnthus’ high market leverage stat punishes its asset coverage and moves it three notches lower in rankings.
- Our overall synthesis of the two methodologies calls for companies that are highly ranked on our overall ranking system while still having better than 1x asset value coverage. This narrows the list down to Grown Rogue (GRIN: CSE), Cansortium (TIUM.USD: CSE), C21 (CXXI: CSE), and Leef (LEEF.)
Credit Tracker By Sector
Credit ratings are not currently available for public cannabis companies leaving companies, lenders and investors with a gap of information. The Viridian Cannabis Credit Tracker fills this gap. The model uses 11 market and financial statement variables to discern 4 key credit factors: Liquidity, Leverage, Profitability, and Size, to provide credit/liquidity analysis for over 370 public Cannabis/Hemp companies.
Weekly Sector Credit – Ag Tech Sector Credit Metrics made a marked improvement compared to last year.
- Of course, we are aware of Agrify and GTI, and if we used average metrics, one data point would be capable of swaying the totals. This is why we rely on medians and quartiles so that outliers do not have an undue impact on the measure. Ag Tech debt/ market cap is now 28x, down from .34x a year ago. The Altman Z score is still poor at -3.22x but much improved from its disastrous -9.47x median last year at this time. Our favorite leverage indicator, total liabilities to market cap, is down to .46x from 1.12x in the previous year. Liquidity has improved as well, with a median free cash flow adjusted current ratio of .46x compared to .07x last year. Both measures continue to indicate a serious need for additional funding, but the situation is not as critical as it was last year.
- We expected that Ag Tech would lag credit quality improvement in its customers, the cultivators but interestingly, the sector seems to be leading the way.
Weekly Sector Credit – Ag Tech Sector Credit Metrics made a marked improvement compared to last year.
- Of course, we are aware of Agrify and GTI, and if we used average metrics, one data point would be capable of swaying the totals. This is why we rely on medians and quartiles so that outliers do not have an undue impact on the measure. Ag Tech debt/ market cap is now 28x, down from .34x a year ago. The Altman Z score is still poor at -3.22x but much improved from its disastrous -9.47x median last year at this time. Our favorite leverage indicator, total liabilities to market cap, is down to .46x from 1.12x in the previous year. Liquidity has improved as well, with a median free cash flow adjusted current ratio of .46x compared to .07x last year. Both measures continue to indicate a serious need for additional funding, but the situation is not as critical as it was last year.
- We expected that Ag Tech would lag credit quality improvement in its customers, the cultivators but interestingly, the sector seems to be leading the way.
