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Canopy Growth (CGC) to Report Q4 Earnings: What's in Store?

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Canopy Growth Corporation CGC is scheduled to report fourth-quarter fiscal 2021 results on Jun 1, before the opening bell.

In the third quarter of fiscal 2021, the company reported a loss of 98 cents versus the Zacks Consensus Estimate of a loss of 21 cents. The company missed estimates in two of the trailing four quarters and surpassed the same in the other two, the average negative surprise being 113.80%.

Let's take a look at how things are shaping up prior to this announcement.

Factors at Play

Canopy Growth, which is well positioned in the growing Canadian recreational cannabis market, has lately been witnessing strength in its business channels amid post-pandemic recovery. During the third-quarter earnings call, the company noted that it has strengthened its competitive position in the Canadian recreational business. This is likely to have driven the company’s fourth-quarter fiscal 2021 performance.

The company’s U.S. cannabidiol (CBD) business is gaining momentum over the past few months on the back of its highly-successful Martha Stewart CBD product launches. Per the company’s last update in February 2021, it has experienced strong consumer demand with the collection being sold in more than 580 Vitamin Shoppe locations across the United States. On continued strong rollout, this trend has likely remained through the the fiscal fourth quarter.

Canopy Growth Corporation Price and EPS Surprise

Canopy Growth Corporation Price and EPS Surprise
Canopy Growth Corporation Price and EPS Surprise

Canopy Growth Corporation price-eps-surprise | Canopy Growth Corporation Quote

Further, the company’s e-commerce website — shopcanopy.com — is expected to have maintained strength during the to-be-reported quarter on robust sales of the Martha Stewart-branded health and wellness CBD gummies, oil and softgels along with the recent launch of Martha's CBD pet products and SurityPro. These developments over the past few months are likely to have significantly contributed to the company’s fiscal fourth-quarter top line.

Over the past few months, BioSteel Sports Nutrition Inc., Canopy Growth’s acquired business, has been witnessing continued momentum driven by Amazon U.K. and U.S. expansion. Further, BioSteel has established a direct-store-delivery (DSD) network with Constellation Brands’ beer distributors with the products starting to be available at independent retailers in the U.S. market. BioSteel has secured agreements with several large key chain accounts across convenience & gas and food/drug/mass channels. These are likely to have considerably driven fiscal fourth-quarter revenues.

During the third-quarter earnings call, the company confirmed that its acquired business Storz & Bickel vaporizer continues to grow on expanded distribution in the United States, broader product portfolio and increased consumer pool. These are likely to have continued through the fourth quarter as well, adding to the top line.

Over the past few months, the company registered strength in sales of This Works brand of products driven by continued growth in e-commerce and sales of the Stress Check hand sanitizer launched in the U.K. This is expected to have driven fourth-quarter revenues.

During the last-reported quarter, the company confirmed that in Ontario, its value flower share was solid, being led by the Twd. brand. The company’s share in the ready-to-drink category in Ontario has also been robust over the past few months. These trends are expected to have continued in the fourth quarter as well, adding to the top line.

The Estimate Picture

The Zacks Consensus Estimate for total fiscal fourth-quarter revenues of $125.8 million suggests growth of 56.3% from the prior-year quarter’s figure.

The consensus mark of a loss of 18 cents per share for the fiscal fourth quarter indicates a surge of 84.8% from the year-ago reported figure.

What Our Model Suggests

Per our proven model, a stock with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) along with a positive Earnings ESP has higher chances of beating estimates. However, this is not the case here as you can see:

Earnings ESP: Canopy Growth has an Earnings ESP of -13.89%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: The company currently carries a Zacks Rank #4 (Sell).

Stocks Worth a Look

Here are a few medical stocks worth considering as these have the right combination of elements to beat on earnings this reporting cycle.

HCA Healthcare, Inc. HCA has an Earnings ESP of +3.26% and a Zacks Rank of 2, at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Encompass Health Corporation EHC currently has a Zacks Rank #2 and an Earnings ESP of +3.89%.

DENTSPLY SIRONA Inc. XRAY has an Earnings ESP of +0.69% and a Zacks Rank of 2, at present.

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