Post by
mrmomo on Jun 14, 2023 8:41am
Canopy VS Tilray...Head to Head!
Just a quick comparison for anyone who's still holding on to these two losers. Just to show if they're fairly valued or over valued.
In terms of revenue, both Canopy & Tilray seem to have reported almost the same revenue in recent filings. And the proftiability seems to be identical as well.......after cog & pre expenses of course. As we don't have the most recent financials for Canopy......just yet.......we'll have to wait until they report next week if this still holds true. But in the meantime, it seems both companies are on par for the same course. Now let's look at valuations.
Canopy comes in with a market cap of $375 us and carrying a debt load of aproximately $1B. With a total EV of ~$1,4B US. Tilray on the other hand, comes with a cap of $1.2B us and with a debt of about $550M. For a total EV of $1,8B US. Now IF both companies report the same amount revenue & the same profitability....then it stand to reason they should be valued in the same manner......with just ONE single caveat. Of which i'll get into in a few minutes.
So if Canopy is being valued at $1,4B & Tilray at $1.8B with the same revenue/profitability, then is Canopy undervalued or is Tilray overvalued? Assuming i don't believe the former is the case, and it's more likely the latter is correct, then that would mean that Tilray STILL has lots to drop in terms of share price, before being valued equally to Canopy or being "fairly valued". and by this i mean being potentially overvlaued by $400M us or ~ 0.60 cents a share lower. Which would mean that Tilray would be "farily valued" at about just over $1.
Now that caveat! And this relates to the "delicate" financial situation that Canopy find themselves and how they are being both perceived & treated by the market. Since Canopy carries a HUGE almost unservicable debtload, the market & investors might be already pricing in some form of BK or failure into the stock price. Therefore there's a discount being appiled to Canopy's stock price AND that would make Tilray fairly valued, if that's the case, and Canopy is the one being discounted by $400M.......for obvious reasons. So which one is right?
I'm not entirely certain, but tend to lean that Canopy is being properly discounted, with 100% justification because of their periless debt problem and the possibility of BK. So would that same reasoning apply to Tilray who carries pratically half the debt that Canopy does? As i don't beleive Tilray is in a dire situation as Canopy is, i do think SOME discount should also be applied to Tilray for their mediocre financial situation. Whether that's $400M worth of discount or not remains to be seen.
What i do know with absolute certainty though, is that a level headed, smart & savvy investor, whether retail or institutional, would not (or shouldn't!) be invested or exposed to either these two dismal companies or this train wreck of a sector. Just TOO many "gosh darn it" wonderful opportunities to be had & exploited beyond these two perenial losers.
GLTA