Home Shares & Financial Canopy's Growth quarterly results are on the way. What can we expect?

Canopy's Growth quarterly results are on the way. What can we expect?

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Canopy Growth (WEED) (CGC) will announce its results for the first quarter of the 2020 financial year on 14 August. Market participants would like to see how the cannabis company did this quarter.

Analysts' expectations about Canapy Growth

In the first quarter of the 2020 financial year, analysts expect Canopy Growth's revenue to grow from 94 million Canadian dollars with 17% to 110 million. They expect that the gross margin will also grow from 15,9% to 22,65%. Analysts also expect that the turnover of Aurora Cannabis (ACB) in the coming quarter will fall by 75% to 114 million Canadian dollars.

The improved margin of Canopy may be due to the better product mix and optimization of production costs. Cannabis companies, including Canopy, have expanded their capacity last year. This capacity growth can translate into economies of scale. As companies produce more, the costs per gram of cannabis should fall.

Aphria (APHA) recently reported the results for the fourth quarter of the 2019 financial year and their production costs also decreased. The operating costs per gram decreased successively from 1,48 Canadian dollars per gram to 1,35 Canadian dollars. The total cost per gram of the company decreased from 2,86 Canadian dollar per gram to 2,35 Canadian dollar. As a result of these improvements, the company's gross margin improved sequentially from 23% to 28%.

Other parts

Analysts expect Canopy Growth to report a growth of 17% and an improved gross margin, but they expect EBITDA to remain red. They expect the loss per share of the company to improve to 0,40 Canadian dollars (from 0,98 Canadian dollars). Expansion costs can put pressure on the net result.

What we look forward to

Canopy Growth also plans to introduce value-added products later this year, in hopes that Canada will also legalize wider-margin edibles and beverages. These products broaden the value-added range, including chocolates, infused drinks and vapes – and represent the next stage for cannabis products.

Read more on MarktRealist (EN, source)

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