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

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Cronos Group CRON is scheduled to report fourth-quarter results on Feb 27, before the market opens.

The company beat earnings expectations by 33.33% in the last reported quarter. Over the trailing four quarters, it surpassed earnings estimates on three occasions and missed in the other, the average positive surprise being 458.33%.

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 the fourth quarter.

Factors in Focus

Cronos is a globally-diversified and vertically-integrated cannabis company.
Revenues soared 238% year over year in the third quarter, driven by the launch of the adult-use market in Canada. A similar trend is likely to have continued in the fourth quarter as well. Sequentially, revenues got a boost from increased sales in domestic-dried cannabis and the inclusion of Redwood.

In September 2019, the company closed its previously-announced acquisition of four Redwood Holding Group, LLC operating subsidiaries. The transaction has provided Cronos with a leading U.S. hemp-based products platform, including hemp-derived CBD-infused skin care and other consumer products, which are sold online, and through retail and hospitality partner channels in the United States, under the brand Lord Jones.

The incremental revenues from Redwood are expected to have boosted the company’s fourth-quarter performance. Moreover, Cronos Group added the province of Alberta to its Canadian domestic distribution network for adult-use products. In addition, sales are likely to have increased with growth in the distribution and supply chain, and implementation of new regulations on Oct 17, 2019, which allows for the sale of additional cannabis-derivative products and format factors beginning December 2019.

Volumes improved in the third quarter on increased cannabis production as well as the adult-use market launch in Canada, with the same anticipated to have continued in the December-end period as well.

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 of 3.

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 quarter.

Vericel Corporation VCEL has an Earnings ESP of +11.29% and currently sports a Zacks Rank #1. The company is scheduled to release fourth-quarter results on Feb 25. You can see the complete list of today’s Zacks #1 Rank stocks here.

Aduro Biotech, Inc. ADRO has an Earnings ESP of +23.08% and flaunts a Zacks Rank #1, at present.

Adamas Pharmaceuticals, Inc. has an Earnings ESP of 1.57% and carries a Zacks Rank #3, currently.  The company is slated to report fourth-quarter numbers on Feb 25.

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