Who's Number One? That Depends

There are many ways to look at who is a leading company in the cannabis industry. This week, Viridian Capital Advisors crunched the numbers in four different metrics to see which companies came out on top with regard to credit quality. Viridian only reviewed companies that have over a $100 million market cap. They used 11 different variables to measure four factors of credit quality: liquidity, leverage, profitability, and size.

Green Thumb Industries (OTC: GTBIF) came out on top based on all four factors. However, it really stood out for profitability based on high scores in projected EBITDA margins and funds from operation to assets. The company also scored highly for leverage. Viridian wrote in its note, “The most highly weighted of these ratios is total liabilities/market cap. GTI’s .36x is significantly better than the 1st quartile measure of .78x. GTI also scores well on the other three leverage indicators, which include a balance sheet ratio, a ratio based on funds from operation from the cash flow statement, and consensus projected debt/EBITDA.”

When it came to liquidity, Planet 13 Holdings (PLTH: OTC) came out at the top. Viridian analysts wrote that “based on its 6.4x current ratio and 5.5x on Viridian’s free cash flow adjusted current ratio. The latter augments the traditional current ratio by adding or subtracting annualized free cash flow to the numerator.”

The big kahuna for size went to Curaleaf (OTC: CURLF) which ranked number one in size based on both assets and market cap. Viridian wrote that “Size is positively correlated to credit quality for several reasons: Larger companies have typically been in existence longer and have more established business positions; they tend to be more diversified; and they tend to have more saleable assets to buffer unexpected cash flow shortfalls.”

Trulieve had a good showing coming in at second place for size and credit ranking. Coming in at the bottom of the chart was iAnthus (OTC: ITHUF). The beleaguered cannabis company that has been in a legal fight with shareholders was ranked last for liquidity and almost last for profitability and credit. While it wasn’t at the bottom of the list, Jushi also had a poor showing with a bottom ranking for leverage and credit.

 

Debra Borchardt

Debra Borchardt is the Co-Founder, and Executive Editor of GMR. She has covered the cannabis industry for several years at Forbes, Seeking Alpha and TheStreet. Prior to becoming a financial journalist, Debra was a Vice President at Bear Stearns where she held a Series 7 and Registered Investment Advisor license. Debra has a Master's degree in Business Journalism from New York University.


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