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Cronos (CRON) to Report Q1 Earnings: What's in the Offing?

Cronos Group CRON is scheduled to report first-quarter results on May 8, before market open.

The company missed earnings expectations by 75% 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 477.08%.

Cronos Group Inc. Price and Consensus
Cronos Group Inc. Price and Consensus

Factors in Focus

Cronos is a global cannabinoid company. Revenues soared 71% year over year in the last reported quarter, primarily driven by an increase in the volume of products sold in the Rest of World segment and the Redwood acquisition. A similar trend is likely to have continued in the to-be-reported quarter as well.

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In September 2019, 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 skincare 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 first-quarter performance.

In December 2019, Cronos launched cannabis vaporizer devices for the Canadian adult-use market under the COVE and Spinach brands.

Meanwhile, the company decided to pause the distribution of PEACE+ hemp-derived CBD tinctures through Altria Group. Inc.’s MO sales and distribution networks. Cronos will continue to evaluate other product formats and categories, which it believes will be more suitable for the PEACE+ brand in the evolving environment. An update on the same will be awaited with the results.

In the fourth quarter, Cronos began selling cannabis flower and extract products to cannabis control authorities in Alberta, Manitoba and Quebec. The addition of new territories is likely to boost performance. 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 +7.69%.

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 quarter.

Sage Therapeutics SAGE has an Earnings ESP of +1.67% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Alexion Pharmaceuticals ALXN has an Earnings ESP of +1.08% and a Zacks Rank #3.

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Click to get this free report Altria Group, Inc. (MO) : Free Stock Analysis Report Alexion Pharmaceuticals, Inc. (ALXN) : Free Stock Analysis Report Sage Therapeutics, Inc. (SAGE) : Free Stock Analysis Report Cronos Group Inc. (CRON) : Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research