How Aurora Cannabis, Curaleaf, and SNDL Stack Up on 420 Day 2023

April 20th has a special significance for the cannabis industry. Its roots go back to the 1970s when a group of California students met secretly at 4:20 p.m. PT to smoke marijuana.

Using cannabis was illegal back then. Today, it's a multibillion-dollar industry with dozens of publicly traded companies based in the U.S. and Canada.

Three of those companies have especially attracted investors' attention in recent years -- Aurora Cannabis (ACB -6.81%), Curaleaf Holdings (CURLF -5.94%), and SNDL (SNDL -2.50%) (formerly known as Sundial Growers). Here's how Aurora, Curaleaf, and SNDL stack up against each other on 420 Day 2023.

Stock performance

Let's start with the bad news. All three of these marijuana stocks have declined significantly over the last 12 months. Aurora Cannabis is the worst of the group, with its share price plunging more than 80%.

SNDL isn't too far behind (or ahead -- whichever way you look at it). Its shares have plummeted more than 70% since this time last year.

Curaleaf, which is based in the U.S., has fared better than its two Canadian peers. Its stock even briefly ventured into positive territory in late 2022.

However, that momentum was dashed with the failure of efforts to advance legislation in the U.S. Congress that would pave the way for banks to offer full services to cannabis operators without violating federal regulations.

The entire cannabis industry has faced stiff headwinds over the last year. Oversupply has driven prices down while higher interest rates have made it more expensive to obtain funding. Labor shortages have created problems for companies in finding workers. So far in 2023, these issues haven't subsided.

Financials

Have those industrywide headwinds shown up in these three companies' financial numbers? Definitely.

Aurora Cannabis announced year-over-year net revenue growth of only 1.8% in its quarter ending Dec. 31, 2022. The company's bulk wholesale business served as a drag on stronger growth in its medical cannabis business.

Aurora remains unprofitable. However, the Canadian cannabis operator finally managed to generate positive adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) -- a goal it's had for years.

Curaleaf delayed the reporting of its 2022 fourth-quarter results because of some snags with converting from International Financial Reporting Standards (IFRS) to U.S. generally accepted accounting principles (GAAP) standards. But the company's Q3 results weren't especially impressive. Curaleaf's Q3 revenue increased 7% year over year to $340 million, while its net loss widened to nearly $51.5 million.

SNDL's net revenue for the quarter ending Sept. 30, 2022 rose a whopping 1,501% year over year. Don't get too excited, though: Nearly all of the increase stemmed from the company's acquisitions of liquor retailer Alcanna and Nova Cannabis. SNDL still posted a hefty net loss of 98.8 million in Canadian dollars.

Overall, Curaleaf appears to be in the strongest financial position. It generated cash flow from operations of $60 million in its most recently reported quarter. SNDL posted an operating cash flow of CA$8.6 million. Aurora is still working toward delivering positive cash flow from operations.

SNDL, though, has the largest cash stockpile, with CA$988 million of cash, marketable securities, and long-term investments as of Sept. 30, 2022. The company also had no outstanding debt.

Curaleaf's cash position stood at $197.7 million as of the same date. Aurora had around CA$310 million in cash as of Feb. 8, 2023, including restricted cash totaling CA$65 million.

Valuation

Since none of these companies are profitable, we can't use earnings-based valuation metrics. However, here's how they compare based on market cap and price-to-sales multiples:

Data source: Yahoo! Finance.

Best of the bunch

Which of these beaten-down cannabis stocks is in the best position on 420 Day 2023? My vote would go to Curaleaf. It deserves a higher valuation because of the company's strength in the U.S. cannabis market.

While the growth opportunities for Curaleaf in the U.S. are significant, investors should be cautious about jumping aboard right now. Federal cannabis reform remains elusive and the supply glut is still in place. Black market sales continue to be problematic.

Curaleaf could be a big winner over time. For now, though, my view is that there are other stocks with more attractive risk-reward profiles.