Cronos Group (CRON) AI Stock Analysis

Compare

409 Followers

Top Page

Cronos Group

(TSX:CRON)

Rating:72Outperform

Price Target:

C$3.00

▲( 4.53% Upside)

Cronos Group exhibits a robust overall stock performance, driven by significant revenue growth and strong market positions in Canada and Israel. The technical analysis reflects positive momentum, though vigilance is needed given potential overbought signals. The valuation is attractive, considering the industry dynamics. Operational efficiencies and investment management remain key areas for improvement to ensure sustainable growth.

Positive Factors

Financial Health

Cronos Group has robust liquidity and an asset-light model which supports its operations.

Sales Growth

Growth was strong in multiple markets, including a 57% increase in Israel and 183% in other countries.

Negative Factors

Profitability Uncertainty

The timing of profitability is unclear, and the company is not expected to achieve positive adjusted EBITDA before 2026.

Regulatory Challenges

Regulatory challenges, including unclear US federal cannabis reform and changes to the Canadian Cannabis Act, are significant factors that negatively impact the stock's valuation.

Valuation Pressure

Cronos Group's enterprise value is slightly negative, attributed to the lack of US reform and investor restrictions, which pressures the stock compared to its peers.

Cronos Group (CRON) vs. iShares MSCI Canada ETF (EWC)

Market Cap

$1.13B

Dividend YieldN/A

Average Volume (3M)145.50K

Price to Earnings (P/E)16.0

Beta (1Y)1.07

Revenue Growth38.16%

EPS GrowthN/A

CountryCA

Employees459

SectorHealthcare

Sector Strength44

IndustryDrug Manufacturers - Specialty & Generic

Share Statistics

EPS (TTM)0.03

Shares Outstanding385,419,000

10 Day Avg. Volume155,105

30 Day Avg. Volume145,498

Financial Highlights & Ratios

PEG Ratio0.66

Price to Book (P/B)0.61

Price to Sales (P/S)0.00

P/FCF Ratio-108.70

Enterprise Value/Market Cap0.02

Enterprise Value/Revenue0.06

Enterprise Value/Gross Profit0.76

Enterprise Value/Ebitda-0.12

Forecast

1Y Price Target

$3.64

Price Target Upside26.96% Upside

Rating ConsensusHold

Number of Analyst Covering2

Cronos Group Business Overview & Revenue Model

Company DescriptionCronos Group Inc. operates as a cannabinoid company. It manufactures, markets, and distributes hemp-derived supplements and cosmetic products through e-commerce, retail, and hospitality partner channels under the Lord Jones and Happy Dance brands in the United States. The company is also involved in the cultivation, manufacture, and marketing of cannabis and cannabis-derived products for the medical and adult-use markets. It sells cannabis and cannabis products, including dried cannabis, pre-rolls, edibles, concentrates, and cannabis extracts through wholesale and direct-to-client channels under its wellness platform, PEACE NATURALS; and operates under adult-use brands, Spinach. It also exports dried cannabis and cannabis oils to Germany, Israel, and Australia. Cronos Group Inc. was founded in 2012 and is based in Toronto, Canada.

How the Company Makes MoneyCronos Group generates revenue primarily through the sale of cannabis and cannabis-derived products in both the recreational and medical markets. The company's revenue streams include direct sales to consumers, wholesale distribution to licensed retailers, and international exports to markets where cannabis is legally permitted. Significant partnerships, such as the strategic investment from Altria Group, provide Cronos with financial resources and expertise to expand its market presence and product offerings. Additionally, the company's focus on research and development aims to innovate new products and enhance existing ones, contributing to its revenue growth. Revenue is further supported by the company's expansion into new markets and its commitment to building a diverse portfolio of cannabis brands tailored to different consumer preferences.

Cronos Group Financial Statement Overview

Summary

Cronos Group displays mixed financial results with solid revenue growth and improved profitability. Operational inefficiencies are evident in negative EBIT margins. The balance sheet is strong, with low leverage and high liquidity, but negative free cash flow needs addressing. Strategic improvements in operational efficiency and investment management are essential for sustainable growth.

Income Statement

Neutral

Cronos Group shows a positive trend in revenue growth with a 6% increase in TTM (Trailing-Twelve-Months) compared to the previous year. Despite this, the company struggles with negative EBIT and EBITDA margins, indicating operational inefficiencies. However, a notable improvement in net profit margin from previous losses to a positive stance suggests some recovery in profitability. Continued focus on cost management is crucial to sustain this trajectory.

Balance Sheet

Positive

The balance sheet reflects strong stability with a low debt-to-equity ratio and a high equity ratio of 92% in TTM, indicating robust financial health and low leverage. The significant cash reserves bolster liquidity, although the reduction in total assets over the years might indicate a need for strategic investments to support growth.

Cash Flow

Neutral

Operating cash flow improved year-on-year, and the company maintains a positive operating cash flow to net income ratio, reflecting efficient cash management. However, negative free cash flow growth signals potential pressure on cash reserves if investment activities continue at the current rate. Strategies to optimize capital expenditure could enhance cash flow stability.

TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Breakdown
Income Statement		Total Revenue
124.59M	117.61M	87.24M	91.90M	74.44M	46.72M
	Gross Profit
34.45M	25.20M	11.91M	11.97M	-17.53M	-25.83M
	EBIT
-64.65M	-76.53M	-84.80M	-116.01M	6.79M	-179.35M
	EBITDA
-38.73M	-50.21M	-71.80M	-91.27M	-192.28M	-82.73M
	Net Income Common Stockholders
49.44M	41.08M	-73.96M	-168.73M	-396.70M	-74.62M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
837.82M	858.80M	861.53M	877.72M	1.00B	1.29B
	Total Assets
1.15B	1.17B	1.14B	1.21B	1.40B	1.93B
	Total Debt
1.82M	2.02M	2.55M	3.88M	9.81M	9.81M
	Net Debt
-796.00M	-856.79M	-666.74M	-760.77M	-877.17M	-1.07B
	Total Liabilities
39.06M	55.33M	43.96M	72.05M	63.46M	217.51M
	Stockholders Equity
1.07B	1.06B	1.10B	1.14B	1.34B	1.71B
Cash Flow		Free Cash Flow
-7.57M	5.69M	-46.26M	-93.98M	-165.88M	-177.85M
	Operating Cash Flow
18.95M	18.84M	-42.84M	-88.95M	-153.62M	-142.46M
	Investing Cash Flow
-69.76M	175.15M	-59.50M	-1.84M	-28.90M	20.15M
	Financing Cash Flow
-3.52M	-1.23M	-1.03M	-2.90M	-13.44M	-5.46M

Cronos Group Technical Analysis

Technical Analysis Sentiment

Positive

Last Price2.87

Price Trends

50DMA

2.60

Positive

100DMA

2.70

Positive

200DMA

2.84

Positive

Market Momentum

MACD

0.10

Negative

RSI

61.20

Neutral

STOCH

77.99

Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For TSE:CRON, the sentiment is Positive. The current price of 2.87 is above the 20-day moving average (MA) of 2.69, above the 50-day MA of 2.60, and above the 200-day MA of 2.84, indicating a bullish trend. The MACD of 0.10 indicates Negative momentum. The RSI at 61.20 is Neutral, neither overbought nor oversold. The STOCH value of 77.99 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for TSE:CRON.

Cronos Group Risk Analysis

Cronos Group disclosed 90 risk factors in its most recent earnings report. Cronos Group reported the most risks in the “Finance & Corporate” category.

Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy

Latest Risks Added 3 New Risks

The imposition of an anti-dumping duty on our imports into Israel could have a material adverse effect on our business, financial condition and results of operations. Q4, 2024

Our option to purchase a significant portion of Cronos GrowCo's production could strain Cronos GrowCo's ability to develop, maintain and grow profitable relationships with third party customers. Q4, 2024

Termination or non-renewal of the Cronos GrowCo Supply Agreement could have a material negative impact on our ability to obtain cannabis biomass at commercially viable prices. Q4, 2024

Cronos Group Peers Comparison

Overall Rating

UnderperformOutperform

Sector (53)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
CRON	72 Outperform	$1.13B	16.01	4.61%	―	38.16%	―
Sector *	53 Neutral	$5.24B	3.07	-43.58%	2.80%	16.87%	-0.11%
CGC		$339.78M	―	-84.50%	―	―	―
ACB		$293.94M	33.12	4.78%	―	―	―
CURLF		$653.68M	―	-25.08%	―	―	―
TCNNF		$859.22M	―	-12.39%	―	―	―
CRLBF		$322.55M	―	-15.18%	―	―	―

* Healthcare Sector Average

Performance Comparison

TSE:CRON

Cronos Group

2.87

-0.77

-21.15%

CGC

Canopy Growth

1.80

-7.31

-80.24%

ACB

Aurora Cannabis

5.22

-1.23

-19.07%

CURLF

Curaleaf Holdings

0.84

-3.88

-82.20%

TCNNF

Trulieve Cannabis

4.30

-6.19

-59.01%

CRLBF

Cresco Labs

0.69

-1.21

-63.68%

Cronos Group Earnings Call Summary

Earnings Call Date:May 08, 2025

(Q1-2025)

% Change Since: 12.11%|

Next Earnings Date:Aug 07, 2025

Earnings Call Sentiment Positive

Cronos Group's earnings call highlighted strong revenue growth and market leadership in both domestic and international markets, notably in Israel. The company has a solid balance sheet and is undertaking strategic expansions to address supply constraints. However, challenges include potential tariffs in Israel and temporary supply constraints affecting growth. Despite these challenges, the positive aspects largely outweigh the negatives.

Q1-2025 Updates

Positive Updates

Strong Revenue Growth

Cronos reported consolidated net revenue of $32.3 million, a 28% increase from the prior year period, with constant currency net revenue growth at 33% year-over-year.

Market Leadership in Canada

The Spinach brand holds the second most popular brand position in Canada with 4.6% market share. In edibles, it maintains the number one position with 20.7% market share.

International Expansion Success

Cronos Israel grew revenue by over 40% year-over-year, with Israeli sales contributing nearly 30% of consolidated net revenue. Peace Naturals brand ended as the number one flower brand in Israel.

Improved Gross Margins

The adjusted gross margin improved significantly to 44% in Q1 2025, compared to 18% in Q1 2024.

Strong Balance Sheet

Cronos maintains a strong balance sheet with $838 million in cash and equivalents, and announced a $50 million share repurchase program.

Negative Updates

Product Supply Constraints

The Spinach brand faced supply constraints due to high consumer demand, leading to restricted growth temporarily.

Potential Tariffs in Israel

Israel is considering tariffs of up to 165% on Canadian cannabis imports, which could impact Cronos's business in the region.

Growth Margin and OpEx Normalization

Though gross margins improved, part of the improvement was timing-related. Operating expenses are expected to rise in the rest of 2025.

Company Guidance

In the 2025 first quarter earnings call, Cronos Group provided several key metrics and guidance for the fiscal year. The company's net revenue was reported at $32.3 million, marking a 28% increase from the previous year, with their adjusted gross margin improving to 44%. The Spinach brand secured a 4.6% market share in Canada, while the SOURZ by Spinach line held a 23% share in the gummy category. The Lord Jones brand maintained a 30.1% market share in the hash-infused pre-roll segment. Internationally, the Peace Naturals brand was the top flower brand in Israel with over 20% market share. Cronos announced a $50 million share repurchase program, maintaining a strong balance sheet with $838 million in cash and no debt. The company anticipates their GrowCo expansion to alleviate current supply constraints, aiming to bolster market share and operational efficiencies moving forward.

Cronos Group Corporate Events

Shareholder Meetings

Cronos Group to Host Virtual 2025 Shareholders Meeting

Neutral

Apr 28, 2025

Cronos Group Inc. announced that its 2025 Annual Meeting of Shareholders will be held virtually on June 20, 2025, allowing registered shareholders and proxyholders to participate online. This virtual format ensures accessibility for participants regardless of location, offering opportunities for engagement through questions and voting. The meeting’s replay will be available on the company’s website, reflecting Cronos’s commitment to transparency and stakeholder engagement.

Business Operations and StrategyFinancial Disclosures

Cronos Group Achieves Record Growth and Market Leadership in 2024

Positive

Feb 27, 2025

Cronos Group reported a significant increase in net revenue for the fourth quarter and full year of 2024, with a 27% and 35% year-over-year growth, respectively. The company has achieved market leadership with its Spinach® brand in Canada and PEACE NATURALS® in Israel, and it is making strides in Germany and the UK. With a strong balance sheet and strategic investments, Cronos is well-positioned for future growth and innovation in the cannabis industry.

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.