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CannTrust (CTST) to Report Q3 Earnings: What's in Store?

Zacks Equity Research

CannTrust Holdings Inc. CTST will report third-quarter 2019 earnings results.

On Feb 25, 2019, the company started trading on the New York Stock Exchange (NYSE) under the ticker symbol CTST.

Shares of CannTrust have plunged 73.8% so far this year versus the industry’s increase of 4.7%.

Let’s see, how things are shaping up for this announcement.

Key Factors to Note

CannTrust is a federally regulated licensed producer of medical and recreational cannabis in Canada. The company’s revenues are generated from the sale of these cannabis products both in the medical and the recreational markets.

Notably, in September 2019, Health Canada suspended the company’s licenses to produce and sell cannabis while allowing the company to continue cultivating and harvesting cannabis.

We would like to remind investors that in July 2019, CannTrust’s greenhouse facility in Pelham, Ontario was found non-compliant under certain regulations imposed by Health Canada. The facility was declared non-compliant for producing cannabis in five unlicensed rooms for a period of six months. Licenses for each of these five rooms were issued in April 2019.

Subsequently, CannTrust implemented a voluntary hold on the sale and shipment of all cannabis products as a precautionary measure.

In light of the recent setbacks, CannTrust’s revenues in the third quarter might have been negatively impacted.

We believe, investors will be keen to know the updates on the above events during the company’s third-quarter conference call.

Recent Developments

In October 2019, CannTrust submitted a detailed remediation plan to Health Canada for the reinstatement of the licenses. The company expects to complete all the activities described within the plan by the end of the first quarter of 2020.

CannTrust also provided an update on the conclusion of the Special Committee’s independent investigation following the company’s receipt of non-compliance reports from Health Canada.

Management also stated that it will temporarily reduce its workforce by approximately 140 through a series of phased layoffs between October and this year-end. The cutback in headcount is expected to bring around $0.4 million as monthly cash savings.

Per the company, it will refile its restated audited financial statements for the year ended December 31, 2018 along with the restated interim financial result for first-quarter 2019 and its interim financial results for the second and third quarters of 2019 in the next 60 days.

Earnings Whispers

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

Earnings ESP: CannTrust has an Earnings ESP of 0.00% as both the Zacks Consensus Estimate and the Most Accurate Estimate are pegged at a loss of 1 cent per share.

Zacks Rank: CannTrust carries a Zacks Rank #2, which increases the predictive power of ESP. However, the 0.00% ESP makes surprise prediction difficult.

CannTrust Holdings Inc. Price and EPS Surprise

CannTrust Holdings Inc. Price and EPS Surprise

CannTrust Holdings Inc. price-eps-surprise | CannTrust Holdings Inc. Quote

Stocks That Warrant a Look

Here are a few healthcare stocks worth considering as our model shows that these have the right mix of elements to beat estimates this time around.

Eyenovia, Inc. EYEN has an Earnings ESP of +10.51% and a Zacks Rank of 2. The company is scheduled to release results on Nov 13. You can see the complete list of today’s Zacks #1 Rank stocks here.

Amicus Therapeutics, Inc. FOLD has an Earnings ESP of +3.98% and is Zacks #2 Ranked. The company is scheduled to release results on Nov 11.

Ascendis Pharma A/S ASND has an Earnings ESP of +8.03% and is a Zacks #2 Ranked player. The company is scheduled to release results on Nov 18.

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