Canopy Growth (CGC) (WEED) and Cronos Group (CRON) are set to release their earnings next week. The cannabis sector has been on a roller coaster this year. The Horizons Marijuana Life Sciences ETF (HMMJ), which tracks the North American cannabis industry, has fallen 26.4% year-to-date. Various headwinds have engulfed the sector. We’ll discuss what investors can expect from the earnings results.
Cannabis earnings season in November
November is an exciting month for the cannabis sector. Many companies will report their earnings. Aurora Cannabis (ACB), Canopy Growth, and Cronos Group will report their earnings next week. Aurora Cannabis hasn’t announced the exact date yet. According to Reuters, the company could report its results on November 11. To learn more about Aurora Cannabis’s revenue estimates for the first quarter of 2020, read Aurora Cannabis’s Revenue: Here’s What Analysts Expect.
After the market closes today, marijuana-REIT company Innovative Industrial Properties (IIPR) will report its third-quarter results. Read Will IIPR Still Be an Investor Favorite Post Q3 Earnings? to learn more.
ScottsMiracle-Gro (SMG) will report its fourth-quarter earnings today when the market opens. KushCo Holdings (KSHB) plans to release its earnings results on Thursday after the market closes. OrganiGram (OGI) could report its fourth-quarter results on November 25. Meanwhile, Green Thumb Industries (GTBIF) will report its third-quarter results on November 20 after the market opens.
Canopy Growth’s earnings next week
Canopy Growth will report its results for the second quarter of fiscal 2020 on November 14 before the market opens. Notably, the revenue expectations are lower for cannabis companies for the quarter ending in September. Analysts expect that cannabis revenues fell 20% sequentially in the quarter ending in September.
A shortage of legal marijuana stores, stricter regulations, and rising black market sales impact cannabis companies’ revenues.
Analysts expect Canopy Growth’s revenues to be around 108 million Canadian dollars in the second quarter—an increase of 362.9% YoY (year-over-year). For fiscal 2020, the company could report revenues of 562.6 million Canadian dollars—a rise of 148.5%.
Previously, we discussed what to expect from cannabis companies. Canopy Growth’s revenue estimate for the second quarter was lower. Cannabis companies have been missing their revenue estimates. Recently, HEXO (HEXO) missed its fourth-quarter guidance and analyst estimates. It also withdrew its fiscal 2020 outlook.
Canopy Growth’s fiscal revenue outlook is also lower due to pessimism about cannabis revenues. However, the company is still positive about hitting the sales target of 1 billion Canadian dollars.
The company could also report an adjusted negative EBITDA of 89.0 million Canadian dollars in the second quarter. For the fiscal year, Canopy Growth could report a negative EBITDA of 318.3 million Canadian dollars.
Cronos Group’s third-quarter earnings
Cronos Group will report its third-quarter results on November 12 before the market opens. Analysts expect the company to report revenues of 14.0 million Canadian dollars—an increase of 275.6% YoY. Notably, the company could report a lower gross margin of 51% compared to 55.1% in the third quarter of 2018. Cronos Group could report a negative EBITDA of 19.2 million Canadian dollars—higher than the negative EBITDA of 4.2 million Canadian dollars in the third quarter of 2018. A Forbes article stated that Cronos Group’s revenue growth is already declining.
Canopy Growth and Cronos Group’s stock prices
Cannabis stocks were in the red in October. Canopy Growth stock fell 12.9%, while Cronos Group stock fell 9.2%. HEXO stock fell the most by 45.7%, while Aphria stock fell 3.6%, respectively. Aurora Cannabis stock also suffered in October and fell 18.2%, respectively.
To learn more about investing in cannabis stocks, read Cannabis Investment: How to Buy ACB, CGC, and Others.
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