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Cronos (CRON) to Report Q4 Earnings: What's in the Offing?

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Cronos Group (CRON - Free Report) is scheduled to report fourth-quarter results on Feb 26, before market open.

The company beat earnings expectations by 33.33% in the last reported quarter. Over the trailing four quarters, it surpassed earnings estimates on two occasions and missed in the other two, the average surprise being 31.84%.

Cronos Group Inc. Price, Consensus and EPS Surprise

 

Cronos Group Inc. Price, Consensus and EPS Surprise

 

Cronos Group Inc. price-consensus-eps-surprise-chart | Cronos Group Inc. Quote

Let us see how things have shaped up prior to this announcement.

Factors in Focus

Cronos is a global cannabinoid company with international production and distribution across five continents. Revenues increased $5.6 million or 96% year over year in the last reported quarter, driven by continued growth in the adult-use Canadian cannabis market, contribution from the Redwood acquisition and growth in the Israeli medical cannabis market. This trend is likely to have continued in the to-be-reported quarter as well.

Rollouts of new products are likely to have resulted in incremental sales. Subsequent to the end of the third quarter of 2020, the United States segment launched a new hemp-derived CBD skincare and personal care brand called Happy Dance, in partnership with Kristen Bell. In October 2020, this segment also launched new full-spectrum tinctures under its hemp-derived CBD brand, Lord Jones.

Operating expenses are likely to be higher in the quarter under review, primarily driven by increased share-based payments related to separation agreements with certain Redwood employees and higher general and administrative expenses inclusive of review costs and other costs.

In the third quarter, Cronos implemented a new enterprise resource planning (“ERP”) system across the Canadian business, which is expected to result in efficiencies throughout its supply chain and operations. This should help the bottom line.

However, the COVID-19 outbreak negatively impacted sales and demand for its products in the United States segment in the third quarter and a similar trend has most likely prevailed in the quarter to be reported as the pandemic worsened during the same timeframe.

Earnings Whispers

Our proven model does not conclusively predict an earnings beat for Cronos this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. Unfortunately, that is not the case here, as you will see below. You can uncover the best stocks to buy or sell before they're reported with our Earnings ESP Filter.

Earnings ESP: Earnings ESP for Cronos is 0.00%.

Zacks Rank: The company currently carries a Zacks Rank #3.

Cronos’ shares have surged 77.2% in the year so far compared with the industry’s growth of 6.7%.

Stocks to Consider

Here are a few stocks you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat this season.

Moderna (MRNA - Free Report) has an Earnings ESP of +0.57% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Lexicon Pharmaceuticals, Inc. (LXRX - Free Report) has an Earnings ESP of +3.57% and a Zacks Rank #2.

Intercept has an Earnings ESP of +14.99% and a Zacks Rank #3.

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Moderna, Inc. (MRNA) - free report >>

Lexicon Pharmaceuticals, Inc. (LXRX) - free report >>

Cronos Group Inc. (CRON) - free report >>

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