Which Marijuana Stock Won Earnings Week — Aurora Cannabis, Canopy Growth, Cronos Group, or Tilray?

Which Marijuana Stock Won Earnings Week -- Aurora Cannabis, Canopy Growth, Cronos Group, or Tilray?
Very, very rich market: Why top Canadian marijuana companies all have their eyes on Europe
Founded in 1993 by brothers Tom and David Gardner, The Motley Fool helps millions of people attain financial freedom through our website, podcasts, books, newspaper column, radio show, and premium investing services.

For several leading Canadian marijuana growers, this was a big week. Four of the biggest players in the Canadian cannabis industry reported their quarterly results: Aurora Cannabis (NYSE:ACB), Canopy Growth (NYSE:CGC), Cronos Group (NASDAQ:CRON), and Tilray (NASDAQ:TLRY).

Although quarterly updates are often referred to as earnings releases, the reality is that a lot more than just earnings (or lack thereof) are reported. These companies provided a wide range of financial and operational information related to the most recent quarter.

So which marijuana stock won the latest earnings week? Heres how they stacked up against each other in key areas.

Data sources: Company press releases and financial statements. CA = Canadian dollars. US = U.S. dollars.

Aurora Cannabis posted the strongest year-over-year revenue growth by far. However, its important to note that the companys big revenue jump came primarily from its acquisitions. The prior-year period revenue total didnt include contributions from MedReleaf, Anandia, and Agropro.

Cronos Group achieved the highest organic revenue growth of the group. Canopy Growth disappointed investors with revenue in the latest quarter that was actually less than the previous sequential quarter and reflected relatively sluggish year-over-year growth. 

Data sources: Company press releases and financial statements. N/A = Not Applicable. CA = Canadian dollars. US = U.S. dollars.

It seems evident which marijuana stock enjoyed the best bottom-line performance in the latest quarter — at least at first glance. Aurora Cannabis racked up a massive profit. However, as my Motley Fool colleague Sean Williams pointed out, this profit wasnt all it appeared to be. 

Auroras unrealized gain on derivatives and its one-time realized gain from its investment in The Green Organic Dutchman were the only reasons the companys profit looked so great. Without these items, Auroras loss in the last quarter was nearly CA$112 million.

On the other hand, Canopy Growth posted the biggest loss in the companys history. But it really wasnt as bad as it looked. Canopys stock-compensation expense from acquisition milestones, share-based compensation expense, and expense related to the change in the fair value of senior convertible notes were the biggest reasons behind the big loss. However, these were largely driven by Canopy stock soaring 63% during the quarter. 

Data sources: Company press releases and financial statements. Includes cash and cash equivalents. CA = Canadian dollars. US = U.S. dollars.

Canopy Growth enjoyed the biggest cash stockpile at the end of the latest quarter by far among its peers. But Canopy is in an even better position now. The CA$429.4 million figure doesnt include the impact of Constellation Brands investment of $4 billion in a recently completed transaction.

All of the marijuana stocks with earnings announcements this week suffered losses except for one — Cronos Group. That makes Cronos the winner in terms of stock performance, even with its meager gain.

So which marijuana stock won earnings week? Cronos Group probably deserves the honor. The company posted strong revenue growth, its bottom-line deterioration wasnt nearly as bad as its peers, and its stock outperformed the rest.

But the main thing to know is this: The latest quarterly results really dont matter in the big scheme of things for any of these stocks. What does matter is how well each company is positioned to succeed as the global marijuana market grows. Aurora Cannabis, Canopy Growth, Cronos Group, and Tilray each can point to progress in the latest quarter in achieving success down the road.

Keith Speights has no position in any of the stocks mentioned. The Motley Fool recommends Constellation Brands. The Motley Fool has a disclosure policy.

Keith began writing for the Fool in 2012 and focuses primarily on healthcare investing topics. His background includes serving in management and consulting for the healthcare technology, health insurance, medical device, and pharmacy benefits management industries. Follow @keithspeights

Its not hard to see why. Projections for fully legal cannabis in Europe, for example, dwarf comparable North American estimates.

The third edition of the European Cannabis Report forecasts a market worth 115.7 billion euros (US$130.33 billion) by 2028. Meanwhile, legal cannabis in the United States could amount to just $75 billion by 2030, according to a recent estimate by Cowan. 

Europe is undergoing a fast-paced wave of regulatory and legislative changes. A legal version of Moores law is at play, i.e., the number of countries that have legalized medical cannabis programs is doubling every two years, wrote the authors of the European report.

If the commentary following the latest crop of cannabis earnings is any indication, Canadas licensed producers are working hard to make an impact in Europe and beyond.

Aurora Cannabis Inc. (ACB.TO) kicked off the week with pre-market earnings on Monday. The Edmonton-headquartered company is currently active in 10 countries outside of Canada. (Australia, Brazil, Cayman Islands, Colombia, Denmark, Germany, Italy, Malta, Poland, and South Africa.)

Aurora said it established a pan-European company in August. Aurora Europe will oversee national divisions on the continent, including Aurora Deutschland GmbH, Europes largest distributor of cannabis according to the company, as well as Aurora Italia, Aurora Malta and Aurora Denmark.

The Aurora Nordic 1 facility in Odense, Denmark is expected to harvest its first crop this fall as construction continues on nearby Aurora Nordic 2. That facility, which is expected to be completed in the first half of 2020, will be Auroras second largest by capacity once Aurora Sun in Medicine Hat, Alberta comes online that same year, the company said.

The EU I think its going to be very, a very rich market for us, chief corporate officer Cam Battley told analysts on the companys first-quarter earnings call.

Were going to be able to move more products we believe in Denmark then were able to move in Canada, chief executive officer Terry Booth added.

Aurora also bolstered its plans in South America, entering into a definitive agreement in September to acquire ICC Labs Inc. for $290 million.

Cronos Group Inc. (CRON.TO) reported its third-quarter earnings before the opening bells on Tuesday.

The notoriously science-driven Toronto-based company is building up capacity outside of Canada in Israel, Australia and Colombia. Cronos is working on expanding its global reach through several joint venture agreements.

The company has a presence on five continents, including production and sales in the highly sought-after German medical market, and plans for expansion into Poland and Australia.

We see Germany as extremely important for our global reach and to plan to continue to grow and open this channel through our Peace Naturals branded medical products, chief executive officer Michael Gorenstein told analysts on a conference call Tuesday morning. The growth opportunities for Cronos are vast, and extend across the globe as markets open.

Tilray Inc. (TLRY) CEO Brendan Kennedy said his company now has the ability to import and distribute its products throughout Latin America, and will use its Portugal campus as a base of operations for European Union markets.

Tilray Portugal will focus on supplying the global medical market, primarily in the EU. Tilray Germany and Tilray Australia and New Zealand are similar in that they focus on importing products and on sales and marketing, Kennedy told analysts on a conference call following the release of third-quarter financial results.

Nanaimo, B.C.-based Tilray has said it was the first to legally export medical cannabis from North America to the European Union, Australia, New Zealand, and South America.

Were now at a point where 35 countries have legalized medical cannabis and its really clear to me how we get from 35 to 40 to 50 to 60 countries that have legalized medical cannabis in a relatively short amount of time, two or three years I think thats where well be, Kennedy said.

Canopy Growth Corp. (WEED.TO) capped the week of cannabis earnings on Wednesday. The company has secured agreements to export cannabis to Australia, Brazil, Czech Republic, Denmark, Germany and Spain.

Canopy has previously announced plans to spend more than 100 million euros (about $150 million) to expand production in the European Union over the next two years.

I think Europe is actually the most, or almost the most, exciting activity going on. So weve been busy in Germany, chief executive Bruce Linton told analysts on the companys second-quarter conference call. I think weve had about 1,000 pharmacies in Germany move our product and were now in the process of seeking approval for upgraded formats of the product. We have plants in the ground in a couple of countries in Europe already in greenhouses.

Linton also expressed excitement about Jamaica, and the opportunity to capitalize on the countrys steady flow of tourists.

I think Jamaica is going to do a great job of not exporting cannabis but importing more tourists and Tweed Jamaica is going to be something when youre on vacation, you may become officially ill and have access to that product and it will make your vacation more enjoyable, he said. The credibility we have in Jamaica has caused us to have an opportunity to export to another Caribbean island, which we havent named, but we think is the dominoes tipping over to that region.

Posted in Aurora