Is Curaleaf Still Attractive After a 92% Year To Date Surge?

• Wondering if Curaleaf Holdings is still a smart way to play the US cannabis recovery, or if the easy upside has already been priced in? You are not alone.
• The stock has been on a wild ride, down 13.5% over the last week but still up 63.9% in the past month, 91.7% year to date, and 108.0% over the last year, even though 3 and 5 year returns remain deeply negative.
• Recent moves have been fueled by optimism around US cannabis reform and Curaleaf’s ongoing expansion in key states. This has sharpened investor focus on who the long term winners will be. At the same time, shifting regulatory headlines and changing sentiment toward cannabis stocks have made the market much more sensitive to any sign of competitive or policy risk.
• On our checks, Curaleaf scores a 3 out of 6 valuation score. This suggests pockets of undervaluation but also areas where expectations already look full. Next we will break down what each valuation approach is really telling us, before finishing with a more holistic way to judge whether the current price truly makes sense.

Curaleaf Holdings delivered 108.0% returns over the last year. See how this stacks up to the rest of the Pharmaceuticals industry.

Approach 1: Curaleaf Holdings Discounted Cash Flow (DCF) Analysis

A Discounted Cash Flow model estimates what a company is worth today by projecting its future cash flows and then discounting those back to a present value. For Curaleaf Holdings, the model used is a 2 Stage Free Cash Flow to Equity approach, based on its latest twelve month free cash flow of about $65.5 million.

Analysts and extrapolations see free cash flow rising steadily, with projections reaching roughly $433.9 million by 2035. Early years are guided by analyst forecasts, while later years are extrapolated by Simply Wall St using gradually slowing growth rates as the business matures. All of these future cash flows are discounted back using an appropriate required return to arrive at a single intrinsic value per share.

On this basis, Curaleaf’s estimated fair value is about $15.20 per share. This implies the stock is trading at roughly a 71.0% discount to its intrinsic value, which suggests a wide margin of safety if the cash flow trajectory proves realistic.

Result: UNDERVALUED

Our Discounted Cash Flow (DCF) analysis suggests Curaleaf Holdings is undervalued by 71.0%. Track this in your watchlist or portfolio, or discover 918 more undervalued stocks based on cash flows.

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for Curaleaf Holdings.

Approach 2: Curaleaf Holdings Price vs Sales

For companies like Curaleaf that are still normalizing profitability, the Price to Sales ratio is often the cleanest way to compare value, because it focuses on what investors are paying for each dollar of revenue rather than volatile earnings. In general, faster growth and lower perceived risk can justify a higher Price to Sales multiple, while slower growth, thinner margins or regulatory uncertainty should push it lower.

Curaleaf currently trades at about 1.94x sales, versus an industry average of roughly 1.11x and a peer group average closer to 3.01x. Simply Wall St’s proprietary Fair Ratio, which estimates what Curaleaf’s Price to Sales should be after accounting for its growth profile, margins, industry, market cap and risk factors, comes out at around 1.90x. This firm specific yardstick is more useful than a simple peer or industry comparison, because it adjusts for the company’s own fundamentals rather than assuming all cannabis or pharmaceutical names deserve the same multiple.

With the actual multiple only slightly above the Fair Ratio, Curaleaf appears broadly in line with what its fundamentals justify at current levels.

Result: ABOUT RIGHT

PS ratios tell one story, but what if the real opportunity lies elsewhere? Discover 1460 companies where insiders are betting big on explosive growth.

Upgrade Your Decision Making: Choose your Curaleaf Holdings Narrative

Earlier we mentioned that there is an even better way to understand valuation. Let us introduce you to Narratives, a simple framework on Simply Wall St’s Community page where you connect your view of a company’s story with explicit assumptions for future revenue, earnings and margins. These then flow into a forecast and a fair value you can compare to today’s share price to help you decide whether to buy, hold or sell. Narratives automatically update as new news or earnings come in so your thesis stays current. This means two Curaleaf investors might both use Narratives but reach very different conclusions. One bullish Narrative might lean on international growth, margin expansion and a fair value above the current analyst high of about CA$4.51. A more cautious Narrative could emphasize regulatory risk, pricing pressure and dilution, producing a fair value closer to or even below the CA$2.65 bear case. This gives you a clear, dynamic way to see how your story, numbers and valuation all line up.

Do you think there's more to the story for Curaleaf Holdings? Head over to our Community to see what others are saying!

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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