S&P 500   3,966.30 (+0.82%)
DOW   33,845.61 (+0.74%)
QQQ   284.25 (+1.33%)
AAPL   143.32 (+1.69%)
MSFT   246.56 (+0.90%)
META   115.70 (+1.55%)
GOOGL   94.11 (-0.87%)
AMZN   90.70 (+2.53%)
TSLA   174.71 (+0.38%)
NVDA   167.58 (+3.96%)
NIO   13.41 (+6.60%)
BABA   93.29 (+5.62%)
AMD   70.96 (+1.17%)
T   19.27 (-0.16%)
MU   55.50 (+3.12%)
CGC   3.23 (-0.31%)
F   13.17 (+0.53%)
GE   85.12 (+0.14%)
DIS   93.01 (+0.93%)
AMC   6.41 (+5.95%)
PYPL   75.74 (+1.77%)
PFE   50.51 (+0.54%)
NFLX   311.81 (+1.10%)
S&P 500   3,966.30 (+0.82%)
DOW   33,845.61 (+0.74%)
QQQ   284.25 (+1.33%)
AAPL   143.32 (+1.69%)
MSFT   246.56 (+0.90%)
META   115.70 (+1.55%)
GOOGL   94.11 (-0.87%)
AMZN   90.70 (+2.53%)
TSLA   174.71 (+0.38%)
NVDA   167.58 (+3.96%)
NIO   13.41 (+6.60%)
BABA   93.29 (+5.62%)
AMD   70.96 (+1.17%)
T   19.27 (-0.16%)
MU   55.50 (+3.12%)
CGC   3.23 (-0.31%)
F   13.17 (+0.53%)
GE   85.12 (+0.14%)
DIS   93.01 (+0.93%)
AMC   6.41 (+5.95%)
PYPL   75.74 (+1.77%)
PFE   50.51 (+0.54%)
NFLX   311.81 (+1.10%)
S&P 500   3,966.30 (+0.82%)
DOW   33,845.61 (+0.74%)
QQQ   284.25 (+1.33%)
AAPL   143.32 (+1.69%)
MSFT   246.56 (+0.90%)
META   115.70 (+1.55%)
GOOGL   94.11 (-0.87%)
AMZN   90.70 (+2.53%)
TSLA   174.71 (+0.38%)
NVDA   167.58 (+3.96%)
NIO   13.41 (+6.60%)
BABA   93.29 (+5.62%)
AMD   70.96 (+1.17%)
T   19.27 (-0.16%)
MU   55.50 (+3.12%)
CGC   3.23 (-0.31%)
F   13.17 (+0.53%)
GE   85.12 (+0.14%)
DIS   93.01 (+0.93%)
AMC   6.41 (+5.95%)
PYPL   75.74 (+1.77%)
PFE   50.51 (+0.54%)
NFLX   311.81 (+1.10%)
S&P 500   3,966.30 (+0.82%)
DOW   33,845.61 (+0.74%)
QQQ   284.25 (+1.33%)
AAPL   143.32 (+1.69%)
MSFT   246.56 (+0.90%)
META   115.70 (+1.55%)
GOOGL   94.11 (-0.87%)
AMZN   90.70 (+2.53%)
TSLA   174.71 (+0.38%)
NVDA   167.58 (+3.96%)
NIO   13.41 (+6.60%)
BABA   93.29 (+5.62%)
AMD   70.96 (+1.17%)
T   19.27 (-0.16%)
MU   55.50 (+3.12%)
CGC   3.23 (-0.31%)
F   13.17 (+0.53%)
GE   85.12 (+0.14%)
DIS   93.01 (+0.93%)
AMC   6.41 (+5.95%)
PYPL   75.74 (+1.77%)
PFE   50.51 (+0.54%)
NFLX   311.81 (+1.10%)

Don’t Buy Into Canopy Growth’s Earnings Outlook 

Don’t Buy Into Canopy Growth’s Earnings Outlook 

Canopy Growth Still Isn’t Profitable 

Shares of Canopy Growth Corporation (NASDAQ: CGC) are up more than 16% after the release of FQ3 earnings but we aren’t buying into the rally, at least not yet. As much as we’d like to see this company make profits we’ve been here before, just when it seems like things are getting better they get worse again. What we want to know, what we’re waiting for, is signs that profitability is not just some seasonal dream but a reality that can be sustained. Until then, the Canadian cannabis market is just another stock market-subsidized pipe dream waiting to go up in smoke

Canopy Growth, The Path To Profitability Is Elusive 

Canopy Growth Corporation has been working hard for the last two, almost three, years to improve its operations and business. All the while it has suffered headwinds in the form of COVID-19 related shutdowns, ongoing oversupply issues, and the continued bottle-necking of licenses for new operations. The end result is a better company but one still struggling with industry-related headwinds that it can’t seem to overcome. The $141 million in revenue is 380 basis points better than expected and a sequential growth but it is also down 7.5% from last year and comes with narrowing margins.  

Moving down to the loss, the company posted an EBITDA loss of $67 million and GAAP EPS of -$0.28 Canadian. This is $0.04 better than the Marketbeat.com consensus but only $1 million better than last year due to lower sales and the deleveraging of fixed costs. So, the income is a little better than last year but due to revenue strength and not margin improvement. Margin actually narrowed and does not point to improving profitability. At the gross level, the GAAP margin contracted 900 basis points while the adjusted gross margin contracted a more substantial 1300 basis points. 


"Throughout fiscal 2022, we continued to reduce our operating expenses and capital investments. With a renewed sense of urgency, we are focused on achieving profitability in Canada by taking additional steps to simplify our business and optimize our expenses, while making strategic investments in key growth areas." 

The Analysts Are Still Holding Canopy Growth Corporation 

The analysts are still holding Canopy Growth Corporation but they are no longer bullish as they once were. Now the sentiment is more “hold what you have until U.S. legalization” than anything else with not one note or shout-out since the release of the Q3 results. It is worth noting the consensus price target is projecting about 100% of upside for the stock so there is some value in the company. The question for us is when is that value going to start being realized because all we’ve seen of the cannabis market is one sell-off after another. 

The Technical Outlook: Canopy Growth Corporation Hits Bottom

Shares of Canopy Growth Corporation hit a bottom just days before the release of earnings and is extending that rebound now. The caveat is that price action is still in a downtrend and the best we expect is for range-bound sideways trading to set in. If the company can improve on its results in the current quarter the rally may extend itself but we are not holding our breath. In our view, the cannabis stocks should be on your watch list but it is still too early to start getting excited about them again. That time won’t come until true profitability and/or U.S. legalization. 

Don’t Buy Into Canopy Growth’s Earnings Outlook 

Should you invest $1,000 in Canopy Growth right now?

Before you consider Canopy Growth, you'll want to hear this.

MarketBeat keeps track of Wall Street's top-rated and best performing research analysts and the stocks they recommend to their clients on a daily basis. MarketBeat has identified the five stocks that top analysts are quietly whispering to their clients to buy now before the broader market catches on... and Canopy Growth wasn't on the list.

While Canopy Growth currently has a "Hold" rating among analysts, top-rated analysts believe these five stocks are better buys.

View The Five Stocks Here

Companies Mentioned in This Article

CompanyMarketRank™Current PricePrice ChangeDividend YieldP/E RatioConsensus RatingConsensus Price Target
Canopy Growth (CGC)
1.9384 of 5 stars
$3.23-0.3%N/A-0.55Hold$5.28
Compare These Stocks  Add These Stocks to My Watchlist 

Thomas Hughes

About Thomas Hughes

Contributing Author: Technical and Fundamental Analysis

Thomas got his start with the markets while working as a Chef. In 2005 a chance invitation to attend the seminar “How To Buy And Sell Your Own Stocks” altered his worldview. Soon trading and stocks consumed his every waking moment to the point of excluding all else. Thomas now enjoys a much different lifestyle engaged in his true passion, uncovering great investments.
Contact Thomas Hughes via email at tmhughes.writeon@gmail.com.