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Cronos (CRON) to Report Q2 Earnings: What’s in the Offing?

Cronos Group is scheduled to report second-quarter results on Aug 6, before market open.

The company beat earnings expectations by 385.71% in the last reported quarter. Over the trailing four quarters, it surpassed earnings estimates on three occasions and missed in the other, the average surprise being 98.51%.

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

Factors in Focus

Cronos is a global cannabinoid company. Revenues increased $5.4 million year over year in the last reported quarter, driven by continued growth in the adult-use Canadian cannabis market, sales from the launch of cannabis vaporizers in the Canadian market, including both adult-use and direct-to-consumer, and the Redwood acquisition. This trend is likely to have continued in the to-be-reported quarter as well.

Cronos continued to roll-out cannabis vaporizer devices for the Canadian adult-use market under the COVE and Spinach brands in the first quarter. These roll-outs should generate incremental revenues in the second quarter. Additionally, in March 2020, the company launched PEACE NATURALS branded cannabis vaporizer devices for the direct-to-consumer market in Canada.

Last year, the company acquired 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. Increased sales owing to the launch of innovative products under this brand should further drive revenues.

Operating expenses are likely to be higher in the second quarter as a result of increased headcount along with escalated sales and marketing costs related to brand development.

However, the company might have seen an adverse impact on its operational capacity or supply-chain delays in certain parts of the business in the quarter due to the COVID-19 outbreak.

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 #4 (Sell).

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.

Bristol-Myers Squibb has an Earnings ESP of +0.23% and a Zacks Rank #2.

Translate Bio has an Earnings ESP of +7.69% and a Zacks Rank #2.

Incyte has an Earnings ESP of +4.62% and a Zacks Rank #3.