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Cronos Group (US) (TSE:CRON)
:CRON

Cronos Group (CRON) AI Stock Analysis

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Cronos Group

(NASDAQ:CRON)

Rating:65Neutral
Price Target:
C$3.00
▲(7.53%Upside)
Cronos Group's overall score is driven by strong financial health and positive earnings call highlights, tempered by operational inefficiencies and mixed technical indicators. The company's strategic initiatives and market positioning support a moderately positive outlook, while potential risks require careful monitoring.
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)

Cronos Group Business Overview & Revenue Model

Company DescriptionCronos Group Inc. is a globally diversified and vertically integrated cannabis company. Headquartered in Toronto, Canada, the company operates within the consumer packaged goods sector, focusing on the production and distribution of cannabis and hemp-derived products. Cronos Group's core products include dried cannabis, cannabis oils, and derivative products such as edibles and topicals. Through its subsidiaries and strategic investments, the company aims to innovate and develop premium consumer brands and products with a focus on quality and consistency.
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 Earnings Call Summary

Earnings Call Date:May 08, 2025
(Q1-2025)
|
% Change Since: 8.98%|
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 Financial Statement Overview

Summary
Cronos Group shows solid revenue growth and improved net profit margins, though operational inefficiencies persist with negative EBIT. The balance sheet is robust with low leverage and high liquidity, but negative free cash flow is a concern. Strategic improvements in operational efficiency and investment allocation are needed.
Income Statement
55
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
70
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
60
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.
BreakdownTTMDec 2024Dec 2023Dec 2022Dec 2021Dec 2020
Income Statement
Total Revenue124.59M117.61M87.24M91.90M74.44M46.72M
Gross Profit34.45M25.20M11.91M11.97M-17.53M-25.83M
EBITDA-38.73M-50.21M-71.80M-91.27M-192.28M-82.73M
Net Income49.44M41.08M-73.96M-168.73M-396.70M-74.62M
Balance Sheet
Total Assets1.15B1.17B1.14B1.21B1.40B1.93B
Cash, Cash Equivalents and Short-Term Investments837.82M858.80M861.53M877.72M1.00B1.29B
Total Debt1.82M2.02M2.55M3.88M9.81M9.81M
Total Liabilities39.06M55.33M43.96M72.05M63.46M217.51M
Stockholders Equity1.07B1.06B1.10B1.14B1.34B1.71B
Cash Flow
Free Cash Flow-7.57M5.69M-46.26M-93.98M-165.88M-177.85M
Operating Cash Flow18.95M18.84M-42.84M-88.95M-153.62M-142.46M
Investing Cash Flow-69.76M175.15M-59.50M-1.84M-28.90M20.15M
Financing Cash Flow-3.52M-1.23M-1.03M-2.90M-13.44M-5.46M

Cronos Group Technical Analysis

Technical Analysis Sentiment
Positive
Last Price2.79
Price Trends
50DMA
2.69
Positive
100DMA
2.66
Positive
200DMA
2.77
Positive
Market Momentum
MACD
0.01
Negative
RSI
63.21
Neutral
STOCH
82.47
Negative
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 2.79 is above the 20-day moving average (MA) of 2.65, above the 50-day MA of 2.69, and above the 200-day MA of 2.77, indicating a bullish trend. The MACD of 0.01 indicates Negative momentum. The RSI at 63.21 is Neutral, neither overbought nor oversold. The STOCH value of 82.47 is Negative, 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 0 New Risks

Cronos Group Peers Comparison

Overall Rating
UnderperformOutperform
Sector (52)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
66
Neutral
C$855.81M-25.08%-0.11%11.22%
65
Neutral
C$1.08B15.584.61%38.16%
55
Neutral
$1.02B-12.39%7.23%64.93%
TSCL
52
Neutral
$303.38M-17.34%-4.38%46.68%
52
Neutral
$7.45B0.30-61.93%2.28%16.62%1.04%
TSACB
50
Neutral
C$340.29M106.523.05%16.39%-98.10%
42
Neutral
C$344.73M-122.10%-18.39%35.21%
* Healthcare Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
TSE:CRON
Cronos Group
2.84
-0.23
-7.49%
TSE:WEED
Canopy Growth
1.69
-6.78
-80.05%
TSE:ACB
Aurora Cannabis
6.21
-1.08
-14.81%
TSE:TRUL
Trulieve Cannabis
5.82
-6.63
-53.25%
TSE:CURA
Curaleaf Holdings
1.29
-3.86
-74.95%
TSE:CL
Cresco Labs
0.74
-1.41
-65.58%

Cronos Group Corporate Events

Shareholder MeetingsBusiness Operations and Strategy
Cronos Group Reports Strong Shareholder Support at 2025 Annual Meeting
Positive
Jun 23, 2025

Cronos Group Inc. announced the results of its 2025 Annual Meeting of Shareholders, where 71.87% of common shares were represented. All nominated directors were elected with over 92.3% approval, and shareholders approved an advisory resolution on executive compensation and the appointment of Davidson & Company LLP as the independent auditor for 2025. These results reflect strong shareholder support and are expected to positively impact the company’s governance and operational strategies.

The most recent analyst rating on (TSE:CRON) stock is a Sell with a C$2.00 price target. To see the full list of analyst forecasts on Cronos Group stock, see the TSE:CRON Stock Forecast page.

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.

Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

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.Date of analysis: Jul 03, 2025