AEBITDA Analysis: Cannabis Stocks With Positive Quarterly Adjusted EBITDA
Updated: Jul 13, 2022
This analysis of cannabis stocks using Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization (AEBITDA) is a factor contributing to the stocks ranked as best cannabis stocks in the Best Cannabis Stocks Analysis.
The following table shows the analysis based on quarterly AEBITDA starting Q1 2020 for the 15 stocks shortlisted in terms of quarterly revenue around or exceeding US$50 million. The table lists stocks in order of % quarters with positive AEBITDA, followed by highest total AEBITDA for the decade.
The main metric to look at is the number of quarters with positive AEBITDA. This is the factor incorporated into the methodology to rank the Best Cannabis Stocks analysis. Companies that consistently delivered positive AEBITDA were favorably ranked, while those with consistently negative AEBITDA were unfavorable ranked. The list is led by the three US MSOs with dedicated analysis pages in the STOCKS category, Trulieve Cannabis, Curaleaf Holdings, and Green Thumb Industries. The companies categorized as apriums (vertically integrated with retail and production), including several MSOs and High Tide, were favorable ranked in this methodology with multiple quarters will positive AEBITDA. Tilray and WM Technology were also favorable ranked. In contrast the Licensed Producers (plums) with consistently negative AEIBITDA quarters through the decade have been unfavorably ranked in this methodology. Points were assigned accordingly in the Best Cannabis Stocks analysis.
I am aware that AEBITDA is not a perfect metric, but it is an industry recognized metric that is worthy of analysis. Several analysts at reputed Financial Institutions use AEIBITDA to compute price targets for stocks in the cannabis sector.
Some investors prefer net income as a metric, but that would be impacted if a company is reinvesting in growth, as was with the case with Amazon during the first decade of the century. For this blog, AEBITDA was used as it provides a good way to identify strong performing companies, without penalizing those that reinvest funds for growth.
A point to note is that there were instances where the quarterly numbers were inconsistent in the news releases, especially when a company restated some numbers in future quarters. I have done my best to use the most accurate and recently available quarterly AEBITDA numbers. But the numbers do serve the purpose of presenting the big picture on a balanced ranking on Cannabis stocks.
This analysis and the tables included will be updated on a regular basis and the relative rankings are expected to change based on AEBITDA numbers reported. The ANALYSIS category of this blog has the other analyses incorporated into the Best Cannabis Stocks analysis.
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Disclosure: I (username Adastra) am an investor not a trader. I am bullish on the Cannabis sector as a long-term investment (2025 and beyond), provided stocks/ETFs are carefully picked based on data-driven due diligence. Of the 15 stocks covered in the Best Cannabis Stocks analysis, I own only High Tide, which I am holding as a long-term investment. But my analysis indicates (without any guarantees) that there is a potential for impressive gains in investing in the stocks best ranked in the analysis, including WM Technology, Trulieve, Curaleaf and any other stocks that will have a dedicated page. I reserve the right to buy or sell at any time any of the stocks mentioned in this blog. I do not short stocks and never will short any stock in a company that makes the world a better place. I do not have insider knowledge of any company covered in this blog. All data used for analysis is from public sources. I have received (as of last update date of this page) ZERO funding for this blog from any of the companies featured in this blog.