When one of the biggest cannabis stocks in the world announces its quarterly earnings, there is inevitably going to be a lot of focus on the event, and that is what could be expected from CGC stock, as Canopy Growth (TSX:WEED) (NYSE:CGC) is all set to report its earnings on February 14, 2020.
The third-quarter results for the period ended on December 31, 2019, are going to be announced prior to the opening of the markets, and hence, the anticipation is a bit heightened. Here is a look at some things investors should know about before the big day.
Key Metrics to Watch
Firstly, the legalization of cannabis derivatives is not going to have any impact on Canopy’s results. It might be a high margin space, but Canopy Growth did not launch its derivative products and, in fact, delayed the launch of its cannabis beverage.
Since the ousting of the company’s charismatic founder Bruce Linton, Canopy has instigated a range of cost-cutting measures at the behest of Constellation Brands (NYSE:STZ). New CEO David Klein has overseen the cost-cutting measures in recent times, and while that is good news, it should be noted that the effects would not be seen in the third-quarter earnings.
CGC stock is down 7.32% to $19.62.
Canopy Growth has held back much of its inventory and made some price adjustments. It is believed that the company could improve its sales figures compared to the previous quarter once these things are released. Analysts expect the company to generate revenue of $104.2 million, and while that represents significant sequential growth, the year-on-year growth is pretty modest. The company’s international operation is, however, expected to be one of the biggest gainers in the quarter, and investors could look out for those figures.
In the second quarter, the company generated C$18.1 million in overseas sales, and that represented a sequential rise of 72%. If Canopy Growth continues to perform in the same vein, then it could prove to be a long-term positive for the company.
Investors should also watch out for the balance sheet, despite the fact that Canopy is a cash-rich company. The company has spent aggressively in order to expand its business, and this may have lasting repercussions.
CGC stock has tumbled more than 60% over the past year.
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