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Most cannabis industry observers realize that valuations and valuations multiples for the major MSOs are up Y/O/Y, spurred by the promise of rescheduling.
The chart shows the Enterprise Value to Consensus Next twelve-month (NTM) EBITDA multiples of fourteen major MSOs from 4/14/23 (light green bar) to 4/12/24 (darker green bar).
Valuation multiples are up for 11 of the 14 companies on the chart. Outliers include Jushi JUSHF, down 35.5%; TerrAscend TSNDF, down 5.2%; and Ascend AAWH, down 0.2%
The multiples of the other companies on the chart rose from 3% for Cresco CRLBF to 70% for Curaleaf CURLF. The group, in aggregate, had a 39% increase in EV/NTM EBITDA multiple from 6.13x to 8.53x.
The lines on the Graph depict the two possible reasons for multiple changes. If a company’s EV/EBITDA multiple went up, it was either because its Enterprise Value went up, or its EBITDA went down, or some combination of the two. The maroon line shows the percent change in enterprise value, while the orange line shows the percent change in consensus NTM EBITDA estimates.
The group EV/EBITDA went up 39% because enterprise values rose 37.9% while EBITDA estimates fell by 0.9%. In other words, the market is simply valuing a static
