Is Sundial Growers (SNDL 0.52%) a cannabis cultivator that moonlights as a marijuana investment bank, or vice versa? Given its decline of more than 37% over the last 12 months, the market doesn't seem to be keen on the stock. As interesting as Sundial's hybrid business model may be, the stock's future depends on convincing investors that it's more than a meme. 

All eyes will be on Sundial's forthcoming earnings report describing its performance in the fourth quarter and for all of 2021. Though investors originally anticipated the earnings to drop March 29, mishaps management attributes to an external auditor have caused a delay, and now the earnings are scheduled to come out before the end of April instead.​​ Putting aside any concerns about why it missed its own timeline for reporting earnings, let's consider what the company might need to show to convince investors that it's capable of making a comeback in 2022.

Two people in an office put sticky notes on a glass wall.

Image source: Getty Images.

It'd be great to get some good news

When the company reports its earnings results, investors will have a lot of things to be on the lookout for, starting with the contents of this chart:

SNDL Revenue (Quarterly) Chart

SNDL Revenue (Quarterly) data by YCharts

Specifically, it would be nice to see revenue return to consistent growth. It'd also be great to see expenses fall and quarterly gross profits rise, but nobody is holding their breath about Sundial becoming profitable anytime soon.

For revenue growth to start up again, thereby driving the company to a comeback, there are a few pathways. 

First, Sundial could sell more cannabis or sell its cannabis products at a higher price. Its gross average selling price did seem to be rising last year, with its third-quarter price for a gram clocking in at $3.23 Canadian dollars in 2021 versus CA$2.67 in 2020, so it's plausible for the latter to deliver some growth.

The second path would be to make more money from its investments and acquisitions made via SunStream Bancorp, its cannabis investment banking division. With CA$489 million in investments committed and more than CA$20 million in investment income in the first three quarters of 2021, which was SunStream's first year in operation, this is also a plausible way to reverse the business's fortunes.

But, since the purchase of the Canadian liquor chain Alcanna for CA$320 million in cash and stock is only complete as of March 31, shareholders will likely need to wait a bit longer to see if the biggest plays from investing operations are bearing fruit.

Any news about investment proceeds would be better than ambiguity, especially because most of Sundial's capital remains untapped, as shown below:

SNDL Total Assets (Quarterly) Chart

SNDL Total Assets (Quarterly) data by YCharts

So, news about new investments will also be critical, as it'll help investors to figure out the expected rate of return on Sundial's committed assets. It'll also clarify whether it could deliver value by taking out more debt, as it's barely using any leverage in comparison to its trove of liquid reserves and its total assets, as shown above.

The final way Sundial could rally would be to spin off or sell its unprofitable and slow-growing business units to generate some revenue and reduce expenses at the same time. Of course, the company doesn't exactly need more cash, considering its quarterly total expenses were only $22.5 million in Q3, so there isn't a lot of pressure to slash expenses immediately. 

Still, given that it hasn't ever proven that it can generate revenue or profits sustainably over time, perhaps refocusing the business on the most effective segments would be favorable. 

The trouble is, it isn't clear which segments are effective. And that's hardly a good sign for making a comeback.

Don't call it a comeback, because it isn't (yet)

While the earnings report could change the picture entirely, at this point in time I don't think it's a good idea to invest in Sundial Growers. 

Though it isn't in any danger of going out of business, there also isn't any indication that it has actually started to make serious progress on a turnaround as of yet, which makes it especially risky. And since there are so many better stocks out there, there's not much reason to park your money with this one.