Please ensure Javascript is enabled for purposes of website accessibility

Cronos Group Stock Rises Cautiously on Q4 EPS Beat, Revenue Miss

By Eric Volkman - Mar 30, 2020 at 7:08PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

There's a very large caveat to that positive bottom-line number, though.

In a rare occurrence for the marijuana industry, a notable stock in the sector has reported a net profit. This happened Monday with Cronos Group (CRON 6.31%), which published its Q4 of fiscal 2019 results.

The quarter saw the company reap just over $7.3 million in revenue, which was a robust 71% over the Q4 2018 figure. This gain was due mainly to the absorption of the Lord Jones cannabidiol (CBD) product line, an acquisition that closed last September. On the bottom line, the company flipped to a profit of nearly $61.6 million ($0.16 per diluted share), from the year-ago loss of $9.7 million.

Marijuana leaf atop a $100 bill.

Image source: Getty Images.

There's a big asterisk next to that bottom-line figure, however. It was due to a nearly $119 million non-cash gain to adjust for the value of derivative liabilities. These are connected with tobacco giant Altria's $1.8 billion investment into the company following a deal made between the two in late 2018.

On an operating basis, Cronos posted a loss of just under $64 million for the quarter, deeper than the $8.9 million it recorded in the same quarter of 2018.

Regardless, the headline Q4 net profit number beat analyst estimates. Prognosticators following the stock were modeling a loss of $0.03 per share, although they anticipated much higher revenue of $11.6 million.

The marijuana company's earnings release comes over one month after it was originally scheduled to occur. The company delayed its publication due to uncertainty around items related to purchases of bulk resin, and to wholesale sales.

Cronos shares inched up only marginally on Monday, against a stock market that had quite a bullish day.

Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Cronos Group Stock Quote
Cronos Group
$3.37 (6.31%) $0.20
Altria Group, Inc. Stock Quote
Altria Group, Inc.
$45.19 (0.09%) $0.04

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 08/15/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.