When Canadian pot producer Cronos Group reports March quarter results on Thursday morning, investors should brace for a disappointment.
The Toronto-based company is one of the fledgling marijuana industry’s under-performers, and that’s why most of the analysts polled by FactSet have slapped Cronos stock with an Underperform rating.
From a February peak of $25.10 per share, Cronos stock (ticker: CRON) has tripped downhill to a recent level around $15.50. But that still leaves the stock valued at hundreds of times the cash flow expected in 2020—the first year in which the analyst consensus thinks Cronos might see a profit.
Expectations ran high for Cronos after its December deal with tobacco giantAltria Group to sell the Marlboro maker a 45% interest for C$2.4 billion (or US$1.8 billion), plus a warrant to lift Altria’s ownership to 55% for another C$1.4 billion.
Since then, however, Cronos hasn’t done much to prove it can actually sell cannabis. The consensus expectation for Thurday’s announcement is for a March quarter loss of C$0.03 per share, on sales of C$6.4 million (or less than US$5 million).
December quarter results at Cronos were among the feeblest among the larger-cap pot producers, with disappointing revenue of just 5.6 million Canadian dollars. By comparison, Canadian leaders Canopy Growth (CGC) and Aurora Cannabis (ACB) sold more than 10-times that amount each. So Cronos has just a sliver of Canada’s medical and recreational pot markets—it even refused to break out the revenue contributions of each segment. Cronos also realized one of the Canadian industry’s lowest average prices on the 1,040 kilogram-equivalents of pot that it sold: averaging C$5.40 a kilo for the December quarter, compared with more than C$10 at Tilray (TLRY).
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Marijuana Company Cronos Group Reports Earnings Today. Here’s What to Expect.
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