-The legalization of marijuana in the United States is gaining considerable momentum. As a result, the cannabis industry is now attracting great attention from investors and multi-state cannabis operators. Two suitable examples are Curaleaf Holdings (CURLF) and Acreage Holdings (ACRHF), which we believe are favorable conditions for improving their profitability. Let's take a closer look.
March 3, 2021
This year, as some states are moving towards legalizing marijuana for recreational purposes, marijuana stocks have performed well. Virginia will become
Legalize marijuana for adult use. Governor Ralph Northam signed the measure into a law this year.
Curaleaf Holdings, Inc., a multi-state cannabis operator,
) And Acreage Holdings, Inc. (
) Strategically positioned to reach a new level this year.
The growing cannabis market provides huge opportunities for these companies. As a result, they are now improving their capabilities and pharmacies in major states and high-growth markets. So far this year, some emerging cannabis companies have achieved considerable returns, and we think there is still a lot of room for growth.
CURLF, headquartered in Wakefield, Massachusetts, is a comprehensive healthcare cannabis operator in the United States. The company conducts business through two divisions-cannabis business and non-marijuana business. It provides CBD products based on hemp, vaporized oil, cartridges, concentrates, capsules, mints, edible foods and flower pods.
Last month, the company announced plans to expand certain products to Utah. Its Select Elite products will be available to patients in medical cannabis dispensaries across the state. CURLF also plans to launch more types of products under the brand in the next few months to meet the growing medical needs.
Similarly, in February, CURLF celebrated the opening of a new brand location in Maine, which marked its 101st store in the country. This new store will provide customers with convenient roadside pickup services and provide customers with more opportunities to use the company's high-quality medical marijuana products.
As of September 30, 2020, the third quarter, CURLF's total revenue increased by 195% year-on-year to 164.1 million US dollars. Its cannabis sales gross profit increased by 279.9% year-on-year to US$89.67 million, while adjusted EBITDA growth increased by 305% year-on-year to US$42.3 million. The company reported a net loss of US$9.34 million during the period and a loss of US$0.01 per share.
In terms of EV/sales in the past 12 months, CURLF's current transaction price is 24.59 times, which is 18.55% higher than the industry average of 8.61 times. In addition, in terms of the price-to-book ratio of the past 12 months, CURLF's transaction price is 7.96 times, 66.2% higher than the industry average of 4.79 times.
In three of the past four quarters, CURLF exceeded Wall Street’s earnings per share expectations. The market consensus on revenue for this fiscal year is $1.27 billion, an increase of 99.1% over the same period last year. Year-to-date, the stock has risen 42.1%.
ACRHF (formerly known as High Street Capital Partners) is an investment company that owns a portfolio of cannabis cultivation, processing and distribution businesses in the United States. Since entering the cannabis industry with a Maine license investment in 2011, the company has rapidly developed into a leading vertically integrated multi-state operator.
Last month, the company's subsidiary High Street Capital Partners reached an agreement with Red White and Bloom Brands to sell all of Acreage Florida's shares for $60 million. The agreement also involves the sale of real estate in Sanderson, Florida. ACRHF intends to use the cash income to improve the company's balance sheet and position it as a substantial long-term growth.
Also last month,
, Will take effect on April 2. He has 25 years of experience in finance and capital markets, as well as deep expertise in complex transactions, which will help him lead the company to achieve long-term growth.
As of September 30, 2020, ACRHF’s reported revenue for the third quarter increased by 42% year-on-year to US$31.7 million, while partner revenue increased by 79% year-on-year to US$17 million. Gross profit margin increased by 110 basis points from the previous month to 42.5%. However, the company reported a net loss of $35.7 million and an adjusted EBITDA loss of $6.9 million.
In terms of EV/sales in the past 12 months, the current transaction price of ACRHF is 5.81 times, which is 32.5% lower than the industry average of 8.61 times. In addition, in terms of the price-to-book ratio of the past 12 months, its transaction price was 2.85 times, 40.5% lower than the industry average of 4.79 times.
Consensus revenue for the 2021 fiscal year is estimated to be $261.9 million, a year-on-year increase of 43.2%. In addition, the stock has risen 117.8% so far this year.
On Wednesday morning, CURLF shares were trading at $17.12 per share, up $0.11 (+0.64%). Year-to-date, CURLF has risen 43.00%, while the S&P 500 Index has risen 2.77% over the same period.
Imon is an investment analyst and news reporter with a passion for financial research and writing. She started her career at Kantar IMRB, a leading market research and consumer consulting organization.