Cruelty, your name is earnings – for weed companies, anyway.
Cannabis companies in Canada have consistently pledged and sued investors at the time of earning, failing to achieve promised profitability, failing to take guidance weeks before earning results, and struggling to sell enough product in Canada or elsewhere to justify their fat. valuations.
There is a major reason why these valuations have had a serious diet: Since recreational marijuana was legalized in Canada last year, ETFMG Alternative Harvest ETF
has fallen 43%, Horizons Marijuana Life Sciences Index ETF
has been cut in half, and Cannabis ETF
which debuted in July, has fallen 37%. The S&P 500 benchmark index
gained 23% during the year.
Earnings Watch: Walmart, weed and some key technology revenue come your way
The next big test for the tortured set of companies begins Monday, with the biggest names in the earnings reporting sector only days in advance of the deadline required by the regulators. Listed companies must report within 45 days of the end of the previous quarter, as for companies that ended their quarter in late September arriving on Thursday.
While card sellers continue to invest in weed companies, not everyone believes there is more to lose. Kantor Fitzgerald initiated coverage of the sector this week, leaving a bottom for the market. Analyst Pablo Zuanic wrote that the valuations are at a two-year low, making the biggest names in the sector attractive.
This is what you would expect from some of the largest cannabis companies.
Cronos Group Inc.
According to a report by Cowen analyst Vivien Azer, Cronos
distributes to the smallest number of provinces – it has not yet entered Quebec, Canada's second most populous province , and recently expanded to Alberta. "While Cronos has announced several third-party supply agreements to improve its efficient capacity, we have not yet seen any meaningful progression on improved distribution to the provinces," Azer wrote.
Cronos continues to have a significant advantage over its peers in the form of a $ 1.8 billion investment from Altria Group Inc.
MO, + 0.00%
. The company chose to use some of the cash to buy Lord Jones, a US CBD brand; prior to acquisition, Cronos had no hemp or CBD-related assets in the United States, unlike some major competitors.
For more: Cronos paid $ 300 million for a small CBD company, and the CEO's private equity company stands to raise $ 120 million of it
Analysts polled by FactSet expects a loss of 3 cents per share on revenue of $ 13.7 million ($ 10.4 million). Cronos is eligible to announce earnings Tuesday before the opening bell and will have a conference call at 8:30 pm Eastern time.
faces analyst expectations for a tough quarter. MKM Partners analyst Bill Kirk wrote in a note to clients that he expects high stock levels in the retail and cultivar segments of the market will push shipments and prices from Tilray.
More: One year ago, Canada's legal cannabis market is down, but not out
Kirk wrote in a note to clients that future expectations for Tilray are still too high and are based on the expectation that profitability probably will improve. Profitability is not going to improve, Kirk writes, because cannabis prices must hold – they fall as more deals become available – brands will have to expand into new markets, and export markets must require Canada-grown cannabis.  Analysts polled by FactSet expect losses of 30 cents per share on sales of $ 49 million. Tilray is expected to release revenues after the closing time on Tuesday, and will host a conference call at 5 p.m. Eastern time.
Aurora Cannabis Inc.
disappointed investors last time the earnings were reported and the figures are expected to get worse this time.
As a result of the increased amount of weeds available, recreational cannabis sales are expected to decline by about 7% compared to the previous quarter, according to Azer. Azer wrote in a note that Aurora has said that the wholesale business – which delivered $ 20 million in the fourth tax quarter – is unlikely to generate revenue for the first quarter.
The company initially targeted profitability on an "adjusted earnings before interest and amortization depreciation" by the fourth quarter, but failed to get through.
Read: Aurora Cannabis Demands California's Weed Culture, But Can't Speak One Word Correctly
“We forecast ACB's loss to expand in 1Q20, driven by lower operating power from wholesale revenue reductions, Wrote Azer. The analyst added that she expected sales of weed medicine in Canada and abroad to be flat.
Analysts expect loss of 5 cents per share on sales of $ 89.7 million, according to FactSet. Aurora is expected to release results after the market closes on Thursday, and a conference call with analysts is set for 7 p.m. Eastern.
Canopy Growth Corp.
The world's largest market-value cannabis company avoided violence during the quarter more than it previously did, and recently announced a product line to change regulations that would allow the sale of edible eateries, beverages and vapes in Canada. Azer notes that Canopy
sales have been largely flat since recreational legalization, and may remain so for a while.
"We expect another similar quarter, normalizing for 1Q20 oil adjustment, although we believe the company is posting more robust growth in December Q (3Q20), most reflecting the impact of newly added new stores," Azer wrote.  See also: Drake tries to brand Canada's pot warning mark and may be in for a fight
Azer also said Canopy can fetch more medical patients from CannTrust Holdings Inc.
CTST, + 0.00%
which has stopped all weed sales after disclosures revealed that weeds had grown in unlicensed rooms.
A new wrinkle to look for: Managers in the canopy have said the company will switch to reporting under US accredited accountants, or GAAP, such as Tilray. Currently, like most Canadian companies, Canopy reports the International Financial Reporting Standards, or IFRS.
Wall Street expects losses in the second quarter of 41 cents a share on sales of $ 101.5 million, according to FactSet. Canopy will post financial results before the market opens on Thursday, and will host a conference call at 8:30 a.m. Eastern. Acreage Holdings Inc.
that Canopy purchased the right to buy in the future following changes in marijuana's legal status in the United States, will report Tuesday after the market has closed. Its conference call is scheduled for 8:30 a.m. Eastern on Wednesday.
Canopy Rivers Inc.
spun out of Canopy Growth due to changes in how Canadian stock exchanges looked at companies holding US cannabis properties, is scheduled to report results before the market opens on Thursday, with a conference call at 1 p.m. 10 East.
• Sundial Growers Inc.
SNDL, + 2.11%
reports on income Wednesday after closing time. The call is at 5pm. Eastern. MarketWatch has previously reported that the company had to return half a tonne of bad weed.
• Aleafia Health Inc.
ALEAF, + 12.20%
ALEF, + 13.58%
reports the results for the third quarter of Tuesday before the opening clock and the call is scheduled for 8:30 Eastern time.  • Terra Tech Corp.
is expected to report earnings after the closing time on Tuesday and has scheduled a call at 4:30 p.m. Eastern.
• Charlotte & # 39; s Web Holdings Inc.
is scheduled to release earnings before the opening hour on Wednesday and has a call at. 8 east.
• Green Organic Dutchman Holdings Inc.
TGOD, + 0.00%
is expected to report results after the closing time on Thursday and has a conference call scheduled for Friday at 9am Eastern.  • The Supreme Cannabis Co. Inc.
SPRWF, + 0.00%
expected to report revenue on Thursday.