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Four major Canadian-based weed growers are expected to announce their next week's earnings, the most important financial test for businesses since Canada's legalization of adult recreational cannabis use on Oct. 17.
Although the legalization took place after the end of the quarter, there is much to learn from the reports of Aurora Cannabis Inc.
CBA -3.57%
CBA -5.84%
, Canopy Growth Corp.
GSC -7.80%
CANNABIS, -8.05%
, Cronos Group Inc.
CRON, -4.36%
CRON, -3.67%
and Tilray Inc.
TLRY, -8.18%
Pot producers were frantically trying to produce enough marijuana to meet demand in the third quarter, so costs could have skyrocketed and hurt earnings, as forecasts for the current quarter and management commentary could indicate the level of sales up to now.
"We have supply chain issues related to legalization in Canada and, at the same time, we have encountered some problems," said Jason Wilson, president of Budding Equity Asset Management and ETFMG Alternative Harvest ETF partner.
MJ -5.66%
"We want to know how the operations are going. Are we putting the product on the market? We know that the transition will not be perfectly harmonious. "
Not to be missed: cannabis is now legal in Canada, but marijuana companies are waiting for a difficult start
Wilson said he was closely monitoring revenue growth and profits.
"Are businesses getting closer to profitability? We know there are more products to market now, but we also want to see production costs and other costs. "
Executives have the opportunity to reveal if they are constrained by the offer, after several big buyers have told MarketWatch that they have problems getting marijuana for sale, receiving about 40% from what they had ordered at the time of legalization. Some have also encountered unexpected problems, such as delays in receiving the excise stamps and the need to be eager to have glue stick to the stamps.
To learn more about the important parameters for judging the performance of cannabis growers, please refer to the Marijuana Stock MarketWatch Guide, which includes the profiles of all these companies. Here's what companies say and what to watch for when they do.
Aurora Cannabis
Even though Aurora has announced a profit for the 2018 fiscal year just a few weeks ago, the company will post the results for the quarter ended September 30 on Monday before the markets open, with a conference call scheduled at 10:30 am , Eastern time.
Expect a new update from executives regarding the Aurora Sky installation in Alberta. Aurora has already invested more than C $ 150 million in the construction of the 800,000-square-foot facility that is expected to produce 8,000 kilograms of weeds per month starting in 2019. The company has obtained a permit of cannabis sales by Health Canada in October.
Pots stock profile: Investments in Aurora Cannabis could be more valuable than its pot
Beyond its construction activities, it will also be necessary to closely monitor Aurora's investments. Last quarter, the company's stake in The Green Organic Dutchman Holdings Ltd.
TGODF, -4.20%
tgod, -3.52%
, for example, has generated more profits on paper than its cannabis-related activities. Since then, Aurora has sold a portion of its shares, but has made other investments, such as the purchase of a $ 20 million Canadian stake in Choom Holdings Inc.
CHOOF, -4.42%
, a pot retailer based in Canada, with an option to acquire 40% of the company at a later date.
Cronos Group
Cronos has two consumer brands available in Canada, called spinach and clove. By the end of October, the company's dried flower products were sold in Ontario, but available in British Columbia. According to GMP Securities analyst Martin Landry, Cronos shipped around 100 kilograms of jars for the leisure market in September, a low figure partly because of the shortage of tax stamps.
When Cronos Announces Results Tuesday before Market Open, with a conference call at 8:30 am Eastern, watch for updates on Building 4, the company's 280,000 square foot facility in Ontario . He received a license but may not have started harvesting until November, according to Landry.
Potty Stock Profile: Meet Cronos, Heinz Cannabis Ketchup
Cronos signed a partnership with a US company, Ginkgo Bioworks Inc., in September, under a contract that reinforces the company's goal of advancing its knowledge of cannabinoids, the compounds of a marijuana plant that produces psychoactive effects or not in users. Tuesday's earnings will be the first quarterly check after the transaction.
Tilray
In early October, Tilray announced the closing of an additional $ 435 million in net financing, which adds to the $ 163 million of net cash received during its initial public offering. to saving earlier this year. While competition between Canopy Growth and its rival is nowhere near $ 4 billion, Tilray chief executive Brendan Kennedy told MarketWatch in October that the company plans to use the proceeds of the deal to continue to grow society.
"We will continue to expand our presence in Canada, we continue to invest in Portugal – we will continue to develop our capabilities within the European Union, for the EU," Kennedy said. "We are constantly evaluating [merger and acquisition] opportunities in Canada and around the world. "
Pot stock profile: Tilray has big plans and a very volatile stock
Unlike some of its competitors, Tilray has offered provincial buyers a range of 200 different products and a large number of brands to choose from. Thus, any comment on what has failed or not will be followed closely. You should also keep an eye on the product that the company shipped in September.
Tilray will report Tuesday after the market closes with a conference call scheduled for 16:30. Eastern Time.
Cover growth
Canopy is one of the few major weed companies with a retail footprint operating in several provinces under the Tweed brand. Leaders may therefore have a better idea of the current situation of the leisure pot, although it has only seven establishments scattered across the country. Since Canopy's weed production is one of the largest of its competitors and it has signed supply agreements with all provinces, investors should closely follow quarterly comments and recommendations. and March.
Canopy General Manager Bruce Linton told MarketWatch in October that each of the company's completed truckloads was worth about $ 3 million Canadian. It's no surprise that Canopy has announced an agreement with Brinks Corp.
BCO, + 0.06%
ensure the security of the company's national and international operations.
Pot stock profile: Canopy Growth is the $ 4 billion gorilla of the cannabis industry.
Canopy is expected to release its results Wednesday before the market opens, with a conference call set at 8:30 am Eastern Time.
Note: According to FactSet surveys, none of the companies has enough analysts for MarketWatch to confidently provide meaningful average estimates of financial performance.
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