Analysis Of The 12 Largest Cannabis Companies Puts Green Thumb #1

Those familiar with my frequent articles on MunAiMarkets are aware that I post summaries of the quarterly financial reports of the 7 largest MSO and 5 largest LP cannabis stocks. These summaries are intended to provide insights into the progress of the financial health of those companies as a basis for making sound investment decisions. This article goes one giant step further and compares the major financial components of each company and ranks their overall financial health.

The financial metrics used in this analysis are a company’s Gross Profit margin; Selling General and Administration (SG&A) expenses; adjusted Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) and Net Profit or Loss Margin, each as a % of a company’s Net Revenue.  Source

Gross Profit Margins as a % of Net Revenue

Gross Profit Margin is the profit remaining after subtracting the cost of goods sold from revenue. A high gross profit margin indicates that a company is successfully producing profit over and above its costs.

Below are the gross profit margins as a % of net revenue of the 12 cannabis companies, ranked in descending order as per their most recent quarterly financial reports. Remember that a higher margin reflects better profitability and cost efficiency.

• (1) Aurora Cannabis (ACB): 54.2%; (2) Ayr Wellness (AYRWF): 53.1%; (3) Green Thumb (GTBIF): 52.5%; (4) Verano (VRNOF): 51.0%; (5) Trulieve (TCNNF): 49.1%; (6) TerrAscend (TSNDF): 48.0%; (7) Cresco Labs (CRLBF): 47.1%; (8) Curaleaf (CURLF): 45.5%; (9) Tilray (TLRY): 26.2%; (10) Organigram (OGI): 25.5%; (11) Canopy Growth (CGC): 21.3%; (12) Cronos (CRON): (17.7)%

Selling, General, and Administrative (SG&A) Expenses as a % of Net Revenue

SG&A expenses are the costs a company incurs to run its business, which include salaries, marketing, rent, utilities, and office supplies and the SG&A margin is the percentage of revenue consumed by these expenses and shows how much revenue is being absorbed by overhead costs.

Below are the SG&A expenses as a % of net revenue of the 12 cannabis companies, ranked in descending order as per their most recent quarterly financial reports. In this instance a lower margin reflects how efficiently a company manages its operating expenses.

• (1) Green Thumb (GTBIF): 25.0%; (2) Cresco Labs (CRLBF): 29.9%; (3) Curaleaf (CURLF): 32.1%; (4) Tilray (TLRY): 32.5%; (5) Trulieve (TCNNF): 34.0%; (6) TerrAscend (TSNDF): 34.7%; (7) Ayr Wellness (AYRWF): 35.6%; (8) Verano (VRNOF): 39.0%; (9) Canopy Growth (CGC): 52.3%; (10) Organigram (OGI): 53.6%; (11) Aurora Cannabis (ACB): 54.6%; (12) Cronos (CRON): (56.3)%

Adjusted EBITDA as a % of Net revenue

EBITDA, or Earnings Before Interest, Taxes, Depreciation, and Amortization, represents the cash profit generated by the company’s operations. Adjusted EBITDA figures remove non-recurring, irregular, and one-time items such as Unrealized gains or losses; Non-cash expenses (depreciation, amortization); Litigation expenses; Gains or losses on foreign exchange; Goodwill impairments; Non-operating income; and Share-based compensation that may distort the EBITDA. The resultant adjusted EBITDA is more accurate when comparing it to the adjusted EBITDA of another companies in the industry.

Below are the Adj. EBITDA as a % of net revenue of the 12 cannabis companies, ranked in descending order as per their most recent quarterly financial reports. In this case, a higher margin reflects the cash profit generated by the company’s operations.

• (1) Green Thumb (GTBIF): 35.7%; (2) Trulieve (TCNNF): 35.5%; (3) Verano (VRNOF): 30.3%; (4) Cresco Labs (CRLBF): 28.8%;  (5) Ayr Wellness (AYRWF): 24.7%; (6) Curaleaf (CURLF): 22.6%; (7) TerrAscend (TSNDF): 20.1%; (8) Tilray (TLRY): 3.4%; (9) Aurora Cannabis (ACB): 3.4%; (10) Organigram (OGI): (0.3)%; (11) Canopy Growth (CGC): (11.3); (12) Cronos (CRON): (42.2)%

Net Profit Margin or Loss as a % of Net Revenue

Net profit margin, or simply net margin, measures how much net income or profit a company generates as a percentage of its revenue. The net profit margin illustrates how much of each dollar in revenue collected by a company translates into profit.

Below are the net profit (loss) margins as a % of net revenue of the 12 cannabis companies, ranked in descending order as per their most recent quarterly financial reports. A higher margin reflects the cash profit generated by the company’s operations.

• (1) Green Thumb (GTBIF): 11.3%; (2) Verano (VRNOF): (2.2)%; 3. Cresco Labs (CRLBF): (2.8)%; 4. Cronos (CRON): (8.9)%; (5) Trulieve (TCNNF): (10.7)%; (6) Curaleaf (CURLF): (14.3)%; (7) Ayr Wellness (AYRWF): (16.9)%; (8) TerrAscend (TSNDF): (18.4)%; (9) Aurora Cannabis (ACB): (29.2)%; (10) Tilray (TLRY): (49.2)%; (11) Organigram (OGI): (72.3)%; (12) Canopy Growth (CGC): (126.9)

In Summary

The sum rankings of the above analyses are listed below, in descending order, to provide an overall assessment of the financial strength of the 12 cannabis companies:

• (1) Green Thumb (GBTIF); (2) Cresco Labs (CRLBF); (3) Trulieve (TCNNF): (4) Verano (VRNOF); (5) Ayr Wellness (AYRWF); (6) Curaleaf (CURLF); (7) TerrAscend (TSNDF); (8) Aurora Cannabis (ACB); (9) Tilray (TLRY); (10) Cronos (CRON); (11) Organigram (OGI); (12) Canopy Growth (CGC)

I am not aware of such a comprehensive comparative analysis of the cannabis industry being available elsewhere on the internet so I will keep this information updated on a quarterly basis.