A (more complete?) follow-up to my post from last night…As a follow-up to my earlier post, I figured I would include a few more LP’s (with reported revenues) in the comparison – WEED, LEAF, and CMED. These companies are of varying size and have differing levels of ‘other activities’ (supply deals, partnerships, product development, expansion, etc.) but for my comparison I am focusing solely on their last reported revenues and their current market cap. The comparison certainly isn’t perfect, by any means, but it gives me a good tool to compare these companies.
So, the table below shows the six LP’s, their last reported revenues, their current market cap (this can vary depending on which website / share count you use, but my numbers should be close enough), their current share price, and the Price / Revenue ratio (I would rather be using their Price / Earnings multiple, but as they are growing companies, earnings aren’t always reflective of their standing):
| LP Name | Last Q revenue
($ millions) | Market Cap (MC)
($ billions) | MC / Rev Ratio | Share Price
($) |
| ACB | 8.3 | 3 | 361.4 | 7.31 |
| APH | 6.17 | 2.1 | 340.4 | 14.06 |
| OGI | 1.92 | 0.44 | 229.2 | 4.10 |
| WEED | 17.6 | 3.8 | 215.9 | 19.91 |
| LEAF | 9.8 | 1.5 | 153.1 | 16.09 |
| CMED | 4.77 | 0.486 | 101.9 | 19.87 |
** This should go without saying, but I know that too many people on Stockhouse focus on share price and not market cap so I will say it. Do NOT get hung up on the fact that OGI’s share price is so much less than most of the other LP’s – it is the market cap comparison that matters, NOT the share price comparison.
Now, when comparing relative valuations of stocks, you certainly get to decide which stocks you want to compare, so that is obviously a big factor in what the numbers are going to reveal. In my earlier post, I chose ACB and APH (before I even looked at the numbers) due to their relative size to OGI and the fact that they had both had significant moves recently (since the start of November, ACB has more than doubled, APH has gone up about 50%, while OGI has ‘only’ gone up about 15% in that time - from around $3.50 to around $4.00 per share). I also intentionally didn’t include WEED, since it is so much bigger than all of the LP’s – and the most established – so I figured it would skew the numbers (but I hadn’t even looked at WEED’s numbers at that time).
So, with the above table, I am sticking to my stance that OGI is about 50% undervalued, at least as compared to its LP peers ACB and APH. That doesn’t change for me. Keep in mind though, that there ARE other outside factors that affect share price as well, such as the lawsuit against OGI that was re-hashed in the news lately, so that can affect share price as well.
The other interesting thing to me now is that both LEAF and CMED appear to have an even longer way to go upwards in share price relative to their peers, even when considering their gains over the last month or two. I don’t currently own EITHER LEAF or CMED (I am staying out of that ACB / CMED fight), but I am certainly looking at them more closely now. Perhaps this explains why ACB is trying so far to add CMED to their fold – they see it as an undervalued asset, as do I.
That’s all for now – I have had my fill of numbers (and words, for that matter) for a while. I feel a bit like a stock analyst now, but hopefully my ‘report’ made more sense than many of the analyst reports do…
BB