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Canadian Cannabis Stocks Trade Higher On Earnings

Aug 15, 2017 • 10:41 AM EDT
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3 MIN READ  •  By Michael Berger
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Earnings season has started to heat up for marijuana stocks and we have seen several companies report earnings that have shown significant growth.

We have also seen companies report earnings that have completely missed the mark.

Today, we are going to highlight three marijuana stocks have recently reported earnings and will provide updates on these companies.

Canopy Growth Continues to Lead

Leading Canadian marijuana producer Canopy Growth Corp. (WEED.TO) (TWMJF) traded slightly higher after the company released its first quarter financial results yesterday and we continue to view the firm as one of the best long-term cannabis investment opportunities.

Canopy generated almost $16 million in revenue during the quarter and continues to record strong top-line growth. The marijuana producer is the largest is Canada and is also focused on medical marijuana market in Germany, Australia, and Chile.

As of June 30th, Canopy Growth reported to have $115.5 million in cash and cash equivalents. The company is well capitalized, well positioned, and well managed. We expect Canopy to continue to lead the global marijuana movement and believe this is an opportunity that cannot be ignored.

Read the full earnings report HERE.

Surna Earnings Miss The Mark

Colorado-based ancillary cannabis company, Surna (SRNA) reported second quarter earnings yesterday that missed the mark and we remain cautious with the company after this report.

Although Surna sells an ancillary product for cultivators, the company blamed the weaker results on the fear created by the Trump administration. We think this excuse is not valid since the company can easily focus on selling its product in other international markets.

The earnings reported was prepared on a going concern basis and management said the cash balance and cash flow from operations will not be sufficient to fund operations over the next twelve months.

As of June 30th, Surna had an accumulated deficit of $16,410,000, a $778,000 deficit in working capital, and $1,353,000 in cash. We are cautious with the shares at current levels and will continue to monitor how this situation develops.

MedReleaf Trades Higher on Sound Earnings

MedReleaf (LEAF.TO) (MEDFF) received a favorable response from the market after the Canadian licensed medical marijuana producer released its first quarter financial results.

Cannabis oils have become a major market in the Canadian cannabis industry and we have been watching this trend on an industry and company level. MedReleaf has benefited from a trend toward smokeless products after it was approved to start selling cannabis oils in the third quarter of 2017.

During the most recent quarter, cannabis-based extract products accounted for 14% of MedReleaf’s total revenue. We expect this number to trend higher over the next year and approach the 50% level. 

Although revenue increased by almost 20% when compared to the prior quarter, net income was $2.9 million lower. The lower net income was primarily due to increased operating costs and the main driver of these higher costs was IPO related expenses, which amounted to $2.5 million.

We remain favorable on MedReleaf and continue to view it as a stock that investors need to watch. 

Read the full earnings report HERE.

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Authored By

Michael Berger

Michael Berger is Managing Partner of StoneBridge Partners, LLC and Founder of Prior to entering the cannabis industry, Michael was an Equity Research Analyst at Raymond James Financial covering the Energy Sector. Michael has been featured in publications such as The Street, Bloomberg, US Money News, and hosts various cannabis events across North America.


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