Canopy Growth (CGC) to Report in Q1 Earnings: What's in Store?

Canopy Growth (NASDAQ:CGC) Corporation CGC is scheduled to report first-quarter fiscal 2022 results on Aug 6, before the opening bell.

In the fourth quarter of fiscal 2021, the company reported a loss of 66 cents. The Zacks Consensus Estimate was pegged at a loss of 18 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 108.8%.

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 the post-pandemic recovery. During the fourth-quarter earnings call, the company noted that despite a challenging industry backdrop, Canada’s recreational business outperformed many of the country’s LPs. This trend is likely to have continued during the first-quarter fiscal 2022 as well, considering the improved market scenario.

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. In April 2021, Canopy Growth launched Quatreau CBD beverages in the United States and became the first U.S. CBD beverage brand to sign with a major beverage distributor, Southern Glazer’s Wine & Spirit. During the June 2021 update, the company noted that its February-launched Canopy's first gummy in Canada — Twd. Strawberry — has been witnessing strong demand. On continued strong rollout and developments, this trend has likely continued through the fiscal first quarter, adding to its top line.

Canopy Growth Corporation Price and EPS Surprise

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

Over the past few months, BioSteel Sports Nutrition Inc., Canopy Growth’s acquired business, has been witnessing continued momentum driven by Amazon (NASDAQ:AMZN) U.K. and U.S. expansion. Further, BioSteel has unveiled a long-term brand ambassador partnership with All-Star basketball player, Luka Doncic of the Dallas Maverick and has secured multi-year partnership with the U.S. Soccer Federation. These developments are likely to have considerably driven fiscal first-quarter revenues.

During the fourth-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. This trend is likely to have continued in the first quarter as well, adding to the top line.

The company’s This Works brand of products is expected to have registered solid U.S. retail growth in the fiscal first quarter on the back of strength in sales of Amazon, thisworks.com, ULTA, and Nordstrom (NYSE:JWN).

The company’s share in the ready-to-drink category in Ontario has also been robust over the past few months. In June 2021, the company acquired Supreme Cannabis — one of the top 10 licensed producers in Canada with a leading premium brand portfolio. The acquisition adds a low-cost, scalable cultivation facility at Kincardine, Ontario. In April, the company launched Vert — the company’s first Quebec-exclusive brand. With the launch, it brings a new offering of local cannabis flower to SQDC shelves. These developments are expected to have contributed significantly during the fiscal first quarter, adding to the top line.

The Estimate Picture

The Zacks Consensus Estimate for total fiscal first-quarter revenues of $127.8 million suggests growth of 48.7% from the prior-year quarter’s reported figure.

The consensus mark for loss stands at 19 cents per share for the fiscal first quarter. It had reported loss of 20 cents per share in the year-ago quarter.

What Our Model Suggests

Our proven model does not conclusively predict an earnings beat for Canopy Growth 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. However, this is not the case here as you can see:

Earnings ESP: Canopy Growth has an Earnings ESP of +30.85%. 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 also have the right combination of elements to beat on earnings this reporting cycle.

Envista Holdings (NYSE:NVST) Corporation NVST has an Earnings ESP of +1.94% and a Zacks Rank #2, currently. The stock is slated to release second-quarter 2021 results on Aug 3. You can see the complete list of today’s Zacks #1 Rank stocks here.

Illumina (NASDAQ:ILMN), Inc. ILMN has an Earnings ESP of +2.36% and a Zacks Rank of 2, at present. The stock is slated to release second-quarter 2021 results on Aug 5.

Henry Schein (NASDAQ:HSIC), Inc. HSIC has an Earnings ESP of +0.45% and is a Zacks #2 Ranked stock. The company is slated to release its second-quarter 2021 results on Aug 3.

5 Stocks Set to Double

Each was hand-picked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2021. Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth. Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.