As mentioned in my earlier article today on Canadian LP stocks, (see here)  the performance of marijuana stocks (both Canadian LPs and American MSOs)  have reverted to their downward trend - DOWN 11.5%, in total, this week and now DOWN 56.7%, YTD.

The American Cannabis Multi-State Operators Index tracks the performance of the 13 largest pure-play vertically integrated companies. Below are the constituent performances this week, in descending order, and YTD, the number of retail stores/dispensaries per constituent (888 in total) with the latest in analysis and commentary on each of the companies here.

Current Operating Cash Flow, Price-to Earnings (P/E) Ratio, Altman-Z Score, Piotroski F Score, Return on Equity (ROE) and Return on Assets (ROA) are provided for six (6) of the companies which should help you assess the financial health of each company, how well the company is being managed and the extent to which the company is over- or under-valued compared to its peers. (The definitions of each metric are detailed at the bottom of the article.) The remaining 7 stocks in the Index have negative price/earnings ratios, do not have positive operating cash flows, have Piotroski F Scores of 4 or less; and have Altman Z-Scores of less than 1 and, as such, are not highlighted.

Advanced This Week: NONE

Declined By Less Than 10%

1. Curaleaf (CURLF): DOWN 3.4% this week; DOWN 33.9% YTD
   • has 34 dispensaries in 34 states
   • Price/Earnings Ratio: Negative
   • Positive Operating Cash Flow: No
   • Piotroski F Score: 5
   • Altman Z-Score: 1.9 ((59% chance of financial distress)
   • Return on Equity (ROE): Negative
   • Return on Assets (ROA): Negative
2. Ascend (AAWH): DOWN 4.0% this week; DOWN 22.6% YTD
   • has 24 dispensaries in 5 states
3. Jushi (JUSHF): DOWN 6.6% this week; DOWN 16.7% YTD
   • has 34 dispensaries in 6 states
4. Acreage (ACRDF/HF): DOWN 8.1% this week; DOWN 44.6% YTD
   • has 28 dispensaries in 9 states

Declined Between 10% and 15%

1. Ayr (AYRWF): DOWN 11.9% this week; DOWN 76.5% YTD
   • has 68 dispensaries in 6 states
2. Goodness Growth (GDNSF): DOWN 12.0% this week; DOWN 31.6% YTD
   • has 85 dispensaries in 17 states
3. TerrAscend (TRSSF): DOWN 12.3% this week; DOWN 74.3% YTD
   • has 23 dispensaries in 4 states
4. Green Thumb (GTBIF): DOWN 12.7% this week; DOWN 49.8% YTD
   • has 77 dispensaries in 15 states
   • Price/Earnings Ratio: Negative
   • Positive Operating Cash Flow: Yes - #1 (see here)
   • Piotroski F Score: 6
   • Altman Z-Score: 2.5 (i.e. 13% chance of operational distress within the next 2 years)
   • Return on Equity (ROE): Negative
   • Return on Assets (ROA): Negative
5. Cresco (CRLBF): DOWN 13.0% this week; DOWN 49.9% YTD
   • has 51 dispensaries in 7 states
   • Price/Earnings Ratio: Negative
   • Positive Operating Cash Flow: Yes (marginal)
   • Piotroski F Score: 4
   • Altman Z-Score: 5.3 (71% chance of financial distress)
   • Return on Equity (ROE): Negative
   • Return on Assets (ROA): Negative
6. Verano (VRNOF): DOWN 13.6% this week; DOWN 55.7% YTD
   • has 138 dispensaries in 13 states
   • Price/Earnings Ratio: Negative
   • Positive Operating Cash Flow: Yes - #2 (see here)
   • Piotroski F Score: 5
   • Altman Z-Score: 1.3 (59% chance of financial distress)
   • Return on Equity (ROE): Negative
   • Return on Assets (ROA): Negative

Declined; More Than 15%

1. Columbia Care (CCHWF): DOWN 16.4% this week; DOWN 43.0% YTD
   • has 85 dispensaries in 17 states
2. Planet 13 (PLNHF): DOWN 16.4% this week; DOWN % 60.3YTD
   • has 5 dispensaries in 3 states
   • Price/Earnings Ratio: Negative
   • Positive Operating Cash Flow: No
   • Piotroski F Score: 7 Altman Z-Score: 4.2 (37% chance of financial distress)
   • Return on Equity (ROE): Negative
   • Return on Assets (ROA): Negative
3. Trulieve (TCNNF): DOWN 16.8% this week; DOWN 46.5% YTD
   • has 181 dispensaries in 8 states
   • Price/Earnings Ratio: Negative
   • Positive Operating Cash Flow: Yes (marginal)
   • Piotroski F Score: 5
   • Altman Z-Score: 1.6 (67% chance of financial distress)
   • Return on Equity (ROE): Negative
   • Return on Assets (ROA): Negative

In total,

• the munKNEE American Cannabis Multi State Operators Index was DOWN 12.3% this week and is now DOWN 56.4% YTD.
• That compares with the munKNEE Canadian Pure-Play Pot Stocks Index which was DOWN  7.9% this week and is now DOWN 55.9% YTD.

Definitions:

Operating Cash Flow:

• Is money involved directly with the production and sale of goods from ordinary operations or, in other words, money coming in through sales minus operating expenses.
• Without positive operating cash flow a business doesn’t survive and, as such, is the best measure of a company’s financial and operational health.

Price/Earnings (P/E) Ratio:

• Is a measure a company's share price to its earnings per share and has the most value when compared against similar companies in the same industry or for a single company across a period of time.
• Helps one determine whether a stock is overvalued (a high P/E) or undervalued (a low P/E) and can also be benchmarked against other stocks in the same industry or against the broader market.

The Altman-Z Score:

• Is a numerical measurement used to predict the chances of a business going bankrupt in the next two years and has an accuracy that ranges from 82% and 94%.
• Is based on five financial ratios - profitability, leverage, liquidity, solvency, and activity. 

The Piotroski F Score:

• Is a back-tested strategy that rates how strong the financial fundamentals are for a value stock and in back-testing of the system against the market between 1976 and 1996 the system it would have beaten the average return on the stock market by 13.4%.
• A score of 0-3 indicates that the company has weak fundamentals while a score of 8-9 indicates a company with powerful fundamentals that are most likely to keep performing well in the future.

Return on Equity (ROE)

• Is a measure of how many dollars of profit are generated as a percentage of each dollar of shareholder's equity and, as such, is a metric of how well the company utilizes its equity to generate profits.
• The higher the ROE, the better a company is at converting its equity financing into profits.

Return on Assets (ROA)

• Is a measure that indicates how profitable a company's net income is as a percentage of its total assets and, as such, factors in a company's debt while return on equity does not.
• A higher ROA means a company is more efficient and productive at managing its balance sheet to generate profits while a lower ROA indicates there is room for improvement.

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