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CANNABISCANADAon Jul 25, 2021 3:10pm
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Something for you to read on a Sunday
Something for you to read on a Sunday Upcoming American Cannabis Earnings Reports Should Reinforce Strong Industry Fundamentals
Alan Brochstein, CFA via gmail.mcsv.net | | | | |
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| | Friends, We are on the cusp of earnings season for cannabis companies, with some of the largest ones beginning to report financials on August 4th. It will be a very busy month! For an updated list of scheduled calls, you can refer to the New Cannabis Ventures Cannabis Investor Earnings Conference Call Calendar. Before we get to the financial reports for the June quarter, the market will likely face some negative news when Tilray reports its Q4 ending in May next week. This is a complicated financial report, as the company completed the merger and renamed itself from Aphria to Tilray at the end of April. Only one month of legacy Tilray operations will be included. Further, the company is converting from Canadian dollars to U.S. dollars. Finally, the numbers aren't likely to look too good based on data from Hifyre, which indicates a loss of share during the quarter at retail level. We have seen some services reporting a consensus that appears way too high at $193 million for the revenue during the quarter. We are optimistic that the reports out of the U.S. will be strong and could attract investor attention. Here is how some of the largest MSOs are expected to report: | | While we are limiting the number of companies included in this table, the smaller MSOs are expected to show robust growth as well. Additionally, ancillary companies are forecast to post strong results. The largest, Scotts Miracle-Gro, boosted guidance for its Hawthorne Gardening division in early June, suggesting that it expects full year growth in revenue to be 40-45%, up from previous guidance for 30-40% growth. Large ancillary companies Hydrofarm and GrowGeneration are expected to see annual revenue growth of 45% and 157%, respectively. As we discussed last week, MSOs are doing just fine despite operating with the challenges of cannabis being federally illegal. Over the next month, we expect them to provide tangible evidence that this remains the case. The MSO stocks remain attractively valued. Hopefully the earnings reports serve as a catalyst for investors to take advantage of what we see as a good opportunity. | | | | |