Canadian cannabis producer Sundial Growers (NASDAQ:SNDL) reached a milestone recently by generating positive earnings from operations for the first time in the fiscal first quarter. This has allowed the stock to gain in triple digits year-to-date. However, the company’s growth prospects look bleak, making its current valuation unsustainable. Let’s take a closer look. Sundial Growers Inc . (SNDL) is a Canadian adult-use cannabis producer and supplier. The company achieved a milestone on May 11, as it reported positive earnings from operations for the first time in the most recent quarter ended March 31, 2021. Its earnings from operations came in at C$1.70 million ($1.41 million), indicating a substantial improvement from the negative year-ago value. Adjusted EBITDA stood at C$3.30 million ($2.73 million) compared to a loss of C$5.60 million ($4.64 million) in the prior-year quarter. This can be attributed to a substantial decline in operating and SG&A expenses.
As a result, the stock gained 104.9% year-to-date, making it one of the top performers in the cannabis market. Shares of SNDL gained 10.2% over the past year, and 160.8% over the past six months. However, if we take a closer look, SNDL’s stellar financials for the fiscal first quarter is not a result of its operations. The company’s business restructuring policies are the primary driver of this performance.
Here’s what could shape SNDL’s performance in the upcoming months: