OUR 9TH YEAR OF PROVIDING PROPRIETARY CAPITAL MARKETS INTELLIGENCE ON THE CANNABIS / HEMP / PSYCHEDELIC SECTORS
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Valuation Tracker By Industry Sector
Valuation Tracker By Sector
The Viridian Value Tracker is the most comprehensive valuation product in the industry.
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- A broad set of 12 valuation measures assures applicability, regardless of whether the company has analyst coverage or revenues. The typically presented EV/ Projected Revenues and EV/ Projected EBITDA are available for less than 1/3 of the cannabis companies we track.
- Most valuation studies present only the average valuation measures, while the Tracker goes one step further and shows the distribution of values (the quartiles, median, and dispersion) for each measure. This gives users a more complete view of how companies in the cohort group are valued.
Week ended 11/15/2024
Sector Valuation – Have we hit bottom in the Cultivation sector?
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- Valuation metrics have fallen pretty steeply since the beginning of November. Our favorite valuation metric, Adjusted EV/ 2025 EBITDAR, has fallen from 7.00x on 11/1 to 6.04x on 11/15. The more commonly seen EV/2025 EBITDA has taken an even steeper drop from a median of 6.2x to 4.77x.
- The decline has been shocking even to those of us who have lived through unpleasant cannabis Christmas seasons before. However, we remain convinced that investors will be well rewarded if they position their portfolios to avoid credit issues caused by refinancing stress or other liquidity crises. Look for companies with adequate free cash flow adjusted current ratios and total liabilities to market cap under 2x, and resist the urge to watch the tape. We can’t promise you won’t find more coal in your stocking this year, but the upside is now pretty convincing. Hang in there!
Week ended 11/15/2024
Sector Valuation – Have we hit bottom in the Cultivation sector?
-
- Valuation metrics have fallen pretty steeply since the beginning of November. Our favorite valuation metric, Adjusted EV/ 2025 EBITDAR, has fallen from 7.00x on 11/1 to 6.04x on 11/15. The more commonly seen EV/2025 EBITDA has taken an even steeper drop from a median of 6.2x to 4.77x.
- The decline has been shocking even to those of us who have lived through unpleasant cannabis Christmas seasons before. However, we remain convinced that investors will be well rewarded if they position their portfolios to avoid credit issues caused by refinancing stress or other liquidity crises. Look for companies with adequate free cash flow adjusted current ratios and total liabilities to market cap under 2x, and resist the urge to watch the tape. We can’t promise you won’t find more coal in your stocking this year, but the upside is now pretty convincing. Hang in there!
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