Chart: Cannabis Is More Capital-Intensive Than Tobacco, Alcohol, Pharmaceuticals - Does It Pay Off?
Portfolio Pulse from Viridian Capital Advisors
The Viridian Chart of the Week highlights the high capital intensity in the cannabis industry compared to other sectors. The analysis shows that companies like Jushi (OTC:JUSHF) and AYR Wellness (OTC:AYRWF) have varying levels of capital intensity, impacting their EBITDA margins and returns on capital. The report suggests that while higher capital intensity can lead to higher EBITDA margins, it may not necessarily result in better returns on investment.
May 28, 2024 | 5:20 pm
News sentiment analysis
Sort by:
Ascending
NEGATIVE IMPACT
AYR Wellness has a high capital intensity with $2.33 of capital for each dollar of sales. Despite significant investments in Ohio and Florida, its projected EBITDA multiple is lower than expected, indicating potential challenges in achieving high returns on capital.
AYR Wellness's high capital intensity and lower-than-expected EBITDA multiple suggest it may face challenges in achieving high returns on its significant investments.
CONFIDENCE 90
IMPORTANCE 70
RELEVANCE 80
POSITIVE IMPACT
Jushi has a lower capital intensity compared to its peers, with only $0.80 of capital for each dollar of sales. Despite this, it has better-projected margins than expected, indicating potential for higher returns on capital.
Jushi's lower capital intensity and better-than-expected projected margins suggest it is efficiently using its capital, which could lead to higher returns on investment.
CONFIDENCE 90
IMPORTANCE 70
RELEVANCE 80