OUR 9TH YEAR OF PROVIDING PROPRIETARY CAPITAL MARKETS INTELLIGENCE ON THE CANNABIS / HEMP / PSYCHEDELIC SECTORS
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Credit Tracker By Industry Sector
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.
Week ended 09/13/2024
Weekly Sector Credit – Agriculture Technology. Proof the Picks and Shovels Aren’t Necessarily Safe Bets
- The Agriculture Technology Sector has suffered dramatically as the capital crunch curtailed expansion plans of the sector’s cultivation clients.
- The sector has poor liquidity with a median free cash flow adjusted current ratio of .03x and a 3rd quartile measure of .97x. This indicates that less than ¼ of the 18 companies have sufficient liquidity to make it through the next year without additional financing.
- Leverage remains relatively manageable with regard to perceived asset values. The total liabilities to market cap median is 1.05x, a relatively benign number. Leverage looks higher when viewed against 2024 projected EBITDA, with a median of 5.23x and a third quartile reading of 15.5x. At least ¼ of the companies are critically overleveraged relative to their current cash flow capabilities.
- Altman’s z-score median is -10.5x, indicating a high failure probability for at least ¼ of the companies.
- We advise investors to be careful of this sector at the current stage of the market. We would rather miss the bottom by waiting for additional signs that business is firming.
Week ended 09/13/2024
Weekly Sector Credit – Agriculture Technology. Proof the Picks and Shovels Aren’t Necessarily Safe Bets
- The Agriculture Technology Sector has suffered dramatically as the capital crunch curtailed expansion plans of the sector’s cultivation clients.
- The sector has poor liquidity with a median free cash flow adjusted current ratio of .03x and a 3rd quartile measure of .97x. This indicates that less than ¼ of the 18 companies have sufficient liquidity to make it through the next year without additional financing.
- Leverage remains relatively manageable with regard to perceived asset values. The total liabilities to market cap median is 1.05x, a relatively benign number. Leverage looks higher when viewed against 2024 projected EBITDA, with a median of 5.23x and a third quartile reading of 15.5x. At least ¼ of the companies are critically overleveraged relative to their current cash flow capabilities.
- Altman’s z-score median is -10.5x, indicating a high failure probability for at least ¼ of the companies.
- We advise investors to be careful of this sector at the current stage of the market. We would rather miss the bottom by waiting for additional signs that business is firming.
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