After conducting a brief online search, I was unable to determine the prevailing price-to-book (P/B) ratio within the cannabis industry. The general consensus online suggests that a P/B ratio under 1 typically indicates undervaluation, while a ratio over 1 implies overvaluation. However, I believe this rule of thumb may not universally apply, as different industries exhibit varying P/B ratio norms.
Initially, I intended to model and monitor the P/B ratios for the entire cannabis industry. However, considering the extensive time and effort such an endeavor would entail, I opted to focus on major players within the industry instead. By analyzing these leading companies, I aim to gain insights that are reflective of the industry as a whole.
Ticker TLRY CRON CGC CURLF CRLBF GTBIF
Share Price 2.4 2.08 0.84 4.3 2.09 10.71 6.19
Share's Outstanding 723283000 381089000 755663000 631090000 316693000 209739000
Market cap 1735879200 792665120 634756920 2713687000 661888370 2246304690
Total Asset 4307259000 1168347000 2190534000 3303432000 1511231000 2512834000
Total Liability 977316000 31647000 1343029000 1999255000 964251000 807018000
Book Value 3329943000 1136700000 847505000 1304177000 546980000 1705816000
PB 0.5212939681 0.6973388933 0.7489712981 2.080765878 1.210077827 1.316850522
NOTE: I Tried putting an image of a spreadsheet but could not figure out how to.
Based on my limited sample size, collected post-'Cannabis Correction' and considering Goodwill and intangible assets as part of the assets, I estimate that NASDAQ-listed cannabis stocks have a reasonable P/B ratio of 0.65. Meanwhile, OTC MSOs and US companies appear to have a fair P/B ratio of 1.5. While this analysis may seem overly simplistic or unrefined to some, my objective is to initiate a dialogue regarding what constitutes a fair P/B ratio within the cannabis sector.
Disclaimer: Not financial advice and is just my opinion.
$TLRY $CRON $CGC $CURLF $CRLBF $GTBIF $TCNNF $MSOS
[link] [comments] https://www.reddit.com/r/stocks/comments/16qjeu3/beyond_the_smoke_unraveling_pricetobook_ratios_of/
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