CGC Stock – Canopy Growth (CGC) to Report Q3 Earnings: What’s in Store?
Canopy Growth Corporation CGC is scheduled to report third-quarter fiscal 2021 results on Feb 9, before market open.
In the second quarter of fiscal 2021, the company’s earnings per share was 16 cents against the Zacks Consensus Estimate of a loss of 23 cents. The company missed estimates in one of the trailing four quarters and surpassed the same in the other three, the average surprise being -15.88%.
Let’s take a look at how things are shaping up prior to this announcement.
Factors at Play
Canopy Growth, which is well positioned in the growing Canadian recreational cannabis market, has lately been witnessing strength in its business channels despite the pandemic-led business disruptions. This is likely to have driven the company’s third-quarter fiscal 2021 performance.
The company, in December, announced the availability of the Martha Stewart CBD wellness products at The Vitamin Shoppe and Super Supplements, both online and at retail locations. This availability during the holiday season is expected to have made significant contributions to the December sales. Further, the company’s e-commerce website — shopcanopy.com — is expected to have maintained its strength during the to-be-reported quarter on the back of robust sales of the Martha Stewart-branded health and wellness CBD gummies, oil and softgels after its September 2020 launch in the United States. Notably, the website is dedicated to the company’s robust portfolio of U.S. hemp-derived CBD product lines and enables customers to choose from product SKUs from brands including First & Free, This Works and BioSteel. These developments over the past few months are likely to have significantly contributed to the company’s fiscal third-quarter top line.
Over the past few months, BioSteel Sports Nutrition Inc., Canopy Growth’s acquired business, has been witnessing continued momentum and has signed distribution agreements with leading beer distribution companies such as Reyes Holdings and Manhattan Beer alongside several other partnerships via Constellation Brands’ Gold Network. Further, BioSteel sales have been benefiting from reopening of retailers post the pandemic along with expanded retail networks in Canada and increased contributions from the United States. These are likely to have considerably driven up the fiscal third-quarter revenues of the company.
Canopy Growth Corporation price and EPS Surprise
Canopy Growth Corporation price-eps-surprise | Canopy Growth Corporation Quote
Canopy Growth, in November 2020, confirmed that its acquired business Storz & Bickel vaporizer revenues registered robust sales as it benefited from expanded distribution in the United States, broader product portfolio and increased consumer pool. We expect Storz & Bickel Volcano Medic 2 advanced cannabis vaporizer device to have maintained its strong customer adoption in the third quarter in Europe, similar to the past few months. These are likely to have driven the fiscal third-quarter revenues for the company.
Over the past few months, the company registered strength in sales of This Works brand of products primarily due to robust e-commerce sales, sell-ins to UK. brick and mortar stores prior to the holiday season in December 2020 and the launch of a new Stress Check hand sanitizer in the United States. This trend is likely to have continued during the to-be-reported quarter, thus driving up revenues.
Canopy Growth, in November 2020, launched a new line of premium CBD-infused beverages, Quatreau. The launch came on the heels of robust growth in sales from the company’s THC-infused beverages, released in early 2020. Quatreau, along with other notable THC-infused cannabis beverage brands like Tweed, Houseplant and Deep Space are expected to have considerably driven the third-quarter top line.
During the last-reported quarter, the company confirmed that in Ontario its value flower share was solid, being led by the Twd. brand. Further, the company also gained strength across total cannabis-infused beverages over the past few months with contributions from beverages under Tweed, Houseplant and Deep Space brands. The company’s share in the ready-to-drink category in Ontario has also been robust over the past few months. All these are expected to have contributed to the top line. Other notable ready-to-drink cannabis-infused beverages available from the company include Tweed Houndstooth & Soda, Tweed Bakerstreet & Ginger and Houseplant Grapefruit.
The company has expanded its First & Free brand into topicals and creams. This Works’ (Canopy Growth’s acquired business) line of CBD Booster skincare and its stress-free hand sanitizers (Stress Check) are other notable offerings. All these are likely to have driven the top line significantly.
The Estimate Picture
The Zacks Consensus Estimate for total revenues for fiscal third quarter of $115.9 million suggests growth of 23.7% from the prior-year quarter’s figure.
The consensus mark of a loss of 21 cents per share for fiscal third quarter indicates a surge of 22.2% from the year-ago quarter’s reported figure.
What Our Model Suggests
Per our proven model, a stock with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) along with a positive Earnings ESP has higher chances of beating estimates. However, this is not the case here as you can see:
Earnings ESP: Canopy Growth has an Earnings ESP of -16.67%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: The company currently carries a Zacks Rank #3.
Stocks Worth a Look
Here are a few medical stocks worth considering as these have the right combination of elements to beat on earnings this reporting cycle.
Option Care Health, Inc. OPCH has an Earnings ESP of +34.69% and a Zacks Rank of 2. You can see the complete list of today’s Zacks #1 Rank stocks here.
Radius Health, Inc. RDUS has an Earnings ESP of +10.54% and a Zacks Rank of 2, at present.
DENTSPLY SIRONA Inc. XRAY has an Earnings ESP of +4.45% and is a Zacks #2 Ranked stock.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.