Please ensure Javascript is enabled for purposes of website accessibility

Why Sundial Growers Stock Moved Higher Today

By Howard Smith - Mar 18, 2021 at 9:43AM

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

Quarterly results for the Canadian pot grower are slowly improving.

What happened

Sundial Growers (SNDL 5.41%) stock has been popular with traders over the past several months. Its daily average trading volume has soared by more than 1,000% since the U.S. elections in November, and its share price has also risen by more than 700% in that time. 

After Sundial reported earnings Wednesday, its shares headed upward again, and were trading higher by 7.9% as of 10:40 a.m. EDT Thursday.

So what

Sundial reported fourth-quarter and full-year 2020 results Thursday night, and there were several positive items of note. Though net revenue for the year declined by 4%, gross revenue increased by 10%. And that increase came as pricing declined. The company reported that its gross selling price per gram equivalent of branded products declined from $6.24 in 2019 to $5.05 in 2020. That's good news and bad news for the cannabis company.

stock graph increasing with marijuana leaves

Image source: Getty Images.

Now what

The good news is the company is growing revenue as it transitions from wholesale to more branded retail sales. Sundial reported branded net cannabis sales increased to 75% of total cannabis sales in 2020, compared to 20% in 2019.  

The bad news on pricing is that management foresees more pricing pressure ahead for the entire industry "due to continuing competition and relative oversupply." That's not a good formula for a company that is working to become profitable. 

But management is optimistic that its operational strategy will pay off. In a statement, Sundial CEO Zach George said the company's "commitment to cultivation in our modular indoor facility" will differentiate it from its peers, and that he expects positive results from the strategy this year. 

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

Sundial Growers Inc. Stock Quote
Sundial Growers Inc.
SNDL
$0.39 (5.41%) $0.02

*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
336%
 
S&P 500 Returns
115%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 06/26/2022.

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.