Canadian cannabis manufacturer Cronos Group (CRON) on Tuesday reported revenue in the third quarter. The Cronos Group share was volatile, moving modestly higher. Other marijuana stocks were mixed.
Cronos Group Earnings
Estimates : A loss of 3 cents per share, flat with last year's profit, since revenues more than tripled to $ 10.4 million, according to Zacks Investment Research.
Results : Cronos's revenue was 53 cents Canadian ($ 0.40), but it is unclear whether it can be compared to the projections. Revenue increased to $ 12.7 million, or around $ 9.586 million.
The results are in the midst of a continued progression for Canada's marijuana stocks. Shares in the sector have fallen over the past year as the legal industry ran up knots in the cannabis supply chain and too few stores in major provinces such as Ontario.
Among other marijuana stocks, Tilray (TLRY) reports revenue for the third quarter following its close today. Canopy Growth (CGC) and Aurora Cannabis (ACB) report on Thursday.
Cronos Group Stock, Marijuana Stocks (19659009) to 8.20 on the stock market today. Stocks have a poor 35 Composite Rating and a slightly better EPS rating of 76. Most marijuana stocks have weaker ratings as investors push the industry to tighten up operations and make a profit. Cronos reported a surprise result in the second quarter.
Canopy Growth stock increased 0.4%. Aurora Cannabis stock rose 0.7% and Tilray stock fell 1.1%.
As for other Canadian marijuana stocks, Hexo (HEXO), which recently laid off employees and withdrew its financial outlook for the next fiscal year, advanced 1.7%.
& # 39; King in the North, & # 39; Small Market Share
Cronos Group's market share has remained among the smaller since compared to Canopy and Aurora. The company wants to take a more "active-light" approach to cannabis, where it grows less of the plant itself. The company has said it wants to attack the next wave of legalization with vaping devices before considering other products.
Stifel analyst Andrew Carter, who last month called the Cronos Group stock "a new king in the north," likes the company because of cash at hand – Canadian $ 2 billion, he said.
He also praised the company's foothold in the US Cronos last year a major investment deal from the tobacco giant Altria (MO). In August, Cronos agreed to buy parts of Redwood Holding Group, which sells hemp CBD products under the name Lord Jones in the United States, for $ 300 million. Gorenstein also co-founded the private equity firm Gotham Green Partners.
However, as Marketwatch reported, Lord Jones & # 39; acquisition price lost Lord Jones & # 39; actual sales of $ 2 million to $ 4 million last year.
Chief Executive Mike Gorenstein and Jason Adler, CEO of Cronos Group, have an indirect interest in Redwood through its ownership interest in some funds associated with Gotham, according to a filing published in line with the deal. A special committee of independent Cronos directors reviewed the agreement.
Untested Model For Marijuana Stocks
Jefferies analyst Owen Bennett also said that Cronos' approach to cannabis has not yet been fully tested. And he said he hoped for more news about "material strategic investments or initiatives" after Altria's investment.
The marijuana industry agreement has slowed. A sub-supply of weeds buzzed the industry after legalizing recreational activities last year. But more recently, the Financial Post reported, some analysts have warned of oversupply, as growers grow hashish faster than stores that sell it, leaving pot companies with piles of inventory.
Carter similarly noted an oversupply across the supply chain. However, he wrote that "oversupply is not necessarily at the consumer level." Instead, he said, the bottleneck was at the wholesale level in the provinces, most of which run stock that stores product before it goes to cannabis stores.
This bottleneck "is likely to be further tightened as the provinces adapt to allocate new space to the other wave products," he added.
These second-wave products, such as vapes and edibles, were not legalized last year. But the regulations around legal sales of them took hold this month. The government expects a "limited selection" of the new products to be available next month.
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