Updated: Mar 17, 2021
Just because cannabis stock prices are flying high again does not always mean they are a good investment. Smart investors should use publicly available information and their best judgement to determine whether a specific company is worth investing in. Coast to Coast Finance is here to help you with the publicly available information and a side-by-side comparison of two companies. In this edition, we’ll compare two publicly traded cannabis companies and let you determine which is a better value, Sundial Growers (SNDL) or Tilray (TLRY). We’re going to keep it simple and pit these companies against each other using standard financial ratios, with a clearly defined “winner” for each. Best of 7 wins this specific matchup, but as always, reach out to firstname.lastname@example.org or your Certified Financial Advisor with questions before making any investment decisions.
We already showed you how to calculate these ratios on your own in our last post, so instead of doing the detailed calculations again, we’re just going to show you the results using publicly available information found on Morningstar.com, here and here. You could find this info yourself in numerous other locations online. Plus, instead of writing up each one of these ratios we’ll present the winner first, and you can read on for more info.
And the winner is...
Tilray easily looks to be a better value when compared to Sundial using these 7 financial ratios. Sundial only beats Tilray on one metric, Price-to-Sales. Notice how both Sundial and Tilray have “N/A” for Price-to-Earnings & Price/Earnings-to-Growth; that is because neither of these companies are actually posting positive earnings. We also want to point out that most information found on SNDL is shown in Canadian Dollars (CAD), and if you are in the United States SNDL stock price will usually be shown in USD. Make sure you are converting to the appropriate currency when you calculate ratios on your own. Lastly, at the time of writing this article, SNDL still had not released their Q4 2020 earnings reports, so their Ratios are calculated using financial statements as of 9/30/2020. As you can imagine, there is often significant stock price movement around the time that companies release earnings, since that’s when investors get concrete data, guidance from company leadership, and insights into how the business is performing. Watch for SNDL to report their earnings on March 17th, 2021.
If you have questions on any of these ratios or how to calculate them yourself, check out our other posts or send us a message. When you get started with your own analysis, try using these same ratios to compare two similar companies and determine which is a better value for you. Look at big names like Ford vs General Motors, or Wal-Mart vs Target.
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This article is for educational purposes only and is not intended to be taken as investment advice. Members of Coast to Coast Finance own long positions in both SNDL and TLRY. Coast to Coast Finance does not recommend SNDL or TLRY. All investments involve risk, and the past performance of a security or financial product does not guarantee future results or returns. Keep in mind that while diversification may help spread risk, it does not assure a profit or protect against loss. There is always the potential of losing money when you invest in securities or other financial products. Investors should consider their investment objectives and risks carefully before investing.