Cresco Labs (CL) AI Stock Analysis

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TSE:CL Dividends

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Cresco Labs

(OTC:CL)

50Neutral

Cresco Labs is on a recovery path with improved cash flow and strategic expansions, yet faces challenges with revenue declines and high leverage. The stock is currently under bearish technical pressure and its valuation remains unattractive given the negative P/E and lack of dividends.

Cresco Labs (CL) vs. S&P 500 (SPY)

Market Cap

$394.70M

Dividend YieldN/A

Average Volume (3M)164.75K

Price to Earnings (P/E)―

Beta (1Y)1.80

Revenue Growth-4.65%

EPS Growth59.09%

CountryCA

Employees2,900

SectorHealthcare

Sector Strength66

IndustryDrug Manufacturers - Specialty & Generic

Share Statistics

EPS (TTM)-0.29

Shares Outstanding333,819,460

10 Day Avg. Volume190,104

30 Day Avg. Volume164,755

Financial Highlights & Ratios

PEG RatioN/A

Price to Book (P/B)N/A

Price to Sales (P/S)0.43

Price to Cash Flow (P/CF)2.60

P/FCF Ratio11.10

Enterprise Value/Market CapN/A

Enterprise Value/RevenueN/A

Enterprise Value/Gross ProfitN/A

Enterprise Value/EbitdaN/A

Forecast

1Y Price Target

$2.77

Price Target Upside211.05% Upside

Rating ConsensusStrong Buy

Number of Analyst Covering4

Cresco Labs Business Overview & Revenue Model

Company DescriptionCresco Labs Inc., together with its subsidiaries, cultivates, manufactures, and sells retail and medical cannabis products in the United States. It provides cannabis in flowers, vape pens, live resins, disposable pens, and extracts under the Cresco brand; vape carts, vape pens, flower, popcorn, shake, pre-rolls, shorties, and concentrates under the High Supply brand; vapes and gummies under the Good News brand; vapes and edibles under the Wonder Wellness Co. brand; and tinctures, capsules, salves, and sublingual oils under the Remedi brand, as well as cannabis products under the Reserve brand. The company also offers cannabis flowers under the FloraCal brand; and chocolate and toffee confections, fruit-forward gummies, hard sweets, and taffy under the Mindy's Edibles brand, as well as licenses the Kiva brand, which produces cannabis infused edibles, including chocolate confections, gummies, mints, and tarts. In addition, the company offers cannabis-infused edibles under the Sunnyside brand. As of January 27, 2022, it owned and operated 48 dispensaries. The company was founded in 2013 and is headquartered in Chicago, Illinois.

How the Company Makes MoneyCresco Labs generates revenue through multiple streams centered around the cannabis market. The primary source of revenue is the sale of cannabis products, which includes flower, edibles, concentrates, and vapes. These products are sold through both wholesale channels to dispensaries and retail operations at the company's owned and operated dispensaries. Additionally, Cresco Labs earns income through licensing agreements for its branded products, allowing other businesses to produce and sell under its well-known brands. The company also benefits from strategic partnerships and acquisitions that expand its market presence and operational capabilities, enhancing its ability to generate revenue across different states. Regulatory compliance and operational efficiency are significant factors contributing to its earnings potential in the highly competitive cannabis industry.

Cresco Labs Financial Statement Overview

Summary

Cresco Labs is on a path to recovery with improving margins and cash flows, despite ongoing revenue challenges. The company has shown operational improvements with positive cash flow, though high leverage and declining equity remain concerns. Continued efforts in enhancing operational efficiency and managing debt levels will be crucial for future stability and growth.

Income Statement

Neutral

Cresco Labs has experienced a decline in total revenue over the past two years with a revenue decrease from $842.7M in 2022 to $724.3M in 2024. Despite having a strong gross profit margin of 50.3% in 2024, the company faces challenges with sustained net losses, though the net loss has decreased from -$175.5M in 2023 to -$74.4M in 2024. EBIT and EBITDA margins have shown improvement, indicating a potential turnaround in operational efficiency.

Balance Sheet

Neutral

The debt-to-equity ratio stands at 1.35 in 2024, reflecting a moderate level of leverage. The equity ratio remains relatively stable at 35.0%, indicating a balanced approach toward asset financing. However, the decline in stockholders' equity from $505.7M in 2023 to $474.9M in 2024 suggests challenges in preserving equity value. Return on equity has improved as net losses have narrowed.

Cash Flow

Neutral

Cresco Labs shows an improvement in operating cash flow, increasing from $58.6M in 2023 to $132.5M in 2024, which is a positive sign of better cash management. Free cash flow has also turned positive, reaching $109.0M in 2024, a significant improvement from $0.7M in 2023. This is indicative of stronger operational performance and better capital expenditure management.

Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Breakdown
Income Statement		Total Revenue
724.34M	770.88M	842.68M	821.68M	476.25M
	Gross Profit
364.45M	362.37M	407.01M	406.35M	283.94M
	EBIT
107.29M	-87.82M	65.75M	87.97M	58.30M
	EBITDA
114.28M	-14.36M	-10.66M	-159.63M	5.23M
	Net Income Common Stockholders
-74.44M	-175.52M	-215.84M	-296.83M	-36.56M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
137.56M	103.43M	119.34M	223.54M	136.34M
	Total Assets
1.36B	1.36B	1.58B	1.78B	1.33B
	Total Debt
639.64M	682.76M	670.17M	624.74M	354.58M
	Net Debt
502.08M	579.33M	550.83M	401.19M	218.24M
	Total Liabilities
967.18M	930.40M	996.01M	982.73M	608.37M
	Stockholders Equity
474.85M	505.69M	627.04M	755.55M	574.45M
Cash Flow		Free Cash Flow
108.99M	681.00K	-67.39M	-82.57M	-91.21M
	Operating Cash Flow
132.48M	58.56M	18.74M	14.49M	-10.83M
	Investing Cash Flow
-25.23M	-44.59M	-36.58M	-163.93M	-44.11M
	Financing Cash Flow
-71.48M	-26.91M	-86.64M	235.00M	142.67M

Cresco Labs Technical Analysis

Technical Analysis Sentiment

Negative

Last Price0.89

Price Trends

50DMA

1.08

Negative

100DMA

1.24

Negative

200DMA

1.71

Negative

Market Momentum

MACD

-0.07

Negative

RSI

43.79

Neutral

STOCH

70.28

Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For TSE:CL, the sentiment is Negative. The current price of 0.89 is below the 20-day moving average (MA) of 0.93, below the 50-day MA of 1.08, and below the 200-day MA of 1.71, indicating a bearish trend. The MACD of -0.07 indicates Negative momentum. The RSI at 43.79 is Neutral, neither overbought nor oversold. The STOCH value of 70.28 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for TSE:CL.

Cresco Labs Peers Comparison

Overall Rating

UnderperformOutperform

Sector (51)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
Sector *	51 Neutral	$5.19B	3.13	-40.94%	2.95%	17.94%	2.00%
CL	50 Neutral	$394.70M	―	-15.18%	―	-4.65%	59.09%
TLRY	44 Neutral	$452.92M	―	-31.06%	―	11.22%	-108.58%

* Healthcare Sector Average

Performance Comparison

TSE:CL

Cresco Labs

0.89

-1.80

-66.91%

CGC

Canopy Growth

1.19

-6.66

-84.84%

OGI

OrganiGram Holdings

1.07

-0.83

-43.68%

ACB

Aurora Cannabis

4.44

-1.84

-29.30%

TLRY

Tilray

0.45

-1.27

-73.84%

Cresco Labs Earnings Call Summary

Earnings Call Date: Mar 12, 2025 | % Change Since: -16.82% | Next Earnings Date: May 14, 2025

Earnings Call Sentiment Neutral

Cresco Labs demonstrated strong cash flow and operational improvements, with strategic expansions in key markets. However, these achievements were offset by revenue declines and margin pressures due to price compression and supply constraints. The company is positioning itself for long-term growth, but faces near-term challenges.

Highlights

Improved Cash Flow and Profitability

Cresco Labs generated $132 million in operating cash flow in 2024, a $74 million improvement from last year, and a $200 million adjusted EBITDA, a $26 million improvement.

Successful Market Expansion

Cresco Labs strengthened its position in Pennsylvania by adding three new dispensaries and plans to expand in Pennsylvania, Florida, and Ohio in 2025. The company also entered the Kentucky market, securing a cultivation license with 25,000 square feet of canopy.

Retail Performance

Cresco Labs' dispensaries were 30% more productive than the market average, maintaining retail revenue year-over-year despite price compression.

Debt Reduction and Strong Financial Position

Cresco Labs retired $40 million of its 2026 note and plans to refinance, showing strong demand from lenders and a commitment to reducing debt.

Lowlights

Revenue Decline

Cresco Labs reported a 6% year-over-year decline in revenue, primarily due to price compression and supply constraints in key markets like Illinois and Pennsylvania.

Wholesale Revenue Pressure

Wholesale revenue declined sequentially, particularly in Illinois and Pennsylvania, due to price compression and supply constraints.

Margin Pressure

The company experienced a decline in adjusted gross margin to approximately 50% in Q4, down from the previous quarter, impacted by price compression and wholesale pressures.

Supply Constraints

Cresco Labs faced supply constraints in Q4, limiting its ability to capitalize on increased demand due to price compression.

Company Guidance

In the Cresco Labs Fourth Quarter 2024 Earnings Conference Call, the company provided comprehensive financial guidance and strategic initiatives for future growth. They reported a total revenue of $724 million for the full year 2024, reflecting a 6% year-over-year decline, but they maintained their adjusted gross profit dollars flat and managed to reduce adjusted SG&A expenses by $29 million. This resulted in a 15% growth in adjusted EBITDA to $200 million and a 126% improvement in operating cash flow, reaching $132 million. For the fourth quarter, Cresco Labs achieved $176 million in revenue and $42 million in adjusted EBITDA, representing 24% of revenue, despite facing price compression and supply constraints in key markets. Looking forward, Cresco Labs plans to maintain its profitability focus in 2025 by driving productivity in core markets and strategically expanding its footprint with new store openings in Pennsylvania, Florida, and Ohio, as well as entering Kentucky's medical cannabis market with a significant cultivation license. The company is also prioritizing independent retailers over multi-state operators (MSOs) to manage accounts receivable risk and ensure long-term sustainability.

Cresco Labs Corporate Events

Business Operations and StrategyFinancial Disclosures

Cresco Labs Achieves Record Financial Performance in 2024

Positive

Mar 12, 2025

Cresco Labs reported record financial results for 2024, with an operating cash flow of $132 million, marking a 126% increase from the previous year. The company achieved a revenue of $724 million and maintained its leading market share in Illinois, Pennsylvania, and Massachusetts. Despite a net loss of $60 million due to one-time charges, Cresco Labs improved its adjusted EBITDA by 15% year-over-year, reflecting its disciplined strategy and strong market positioning.

Business Operations and Strategy

Cresco Labs Expands into Kentucky’s Medical Cannabis Market

Positive

Mar 10, 2025

Cresco Labs has announced a management services agreement to operate a Tier 3 Cultivation License in Kentucky, marking a significant expansion into the state’s newly launched medical cannabis market. This move positions Cresco Labs as a key player in Kentucky’s burgeoning cannabis industry, with the potential to influence market growth and capitalize on projected revenue increases, reinforcing its strategic expansion and investment in high-return growth opportunities.

Financial Disclosures

Cresco Labs to Announce Q4 2024 Financial Results

Neutral

Mar 3, 2025

Cresco Labs announced it will release its fourth quarter and full-year 2024 financial results on March 12, 2025. The announcement includes a conference call and webcast to discuss the results and highlight key business developments, which could impact the company’s market positioning and stakeholder interests.

Glossary

OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.

NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.

UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.