Cronos Group Inc. (TSE:CRON) Consensus Forecasts Have Become A Little Darker Since Its Latest Report

It's been a mediocre week for Cronos Group Inc. (TSE:CRON) shareholders, with the stock dropping 12% to CA$3.88 in the week since its latest quarterly results. Revenues of US$23m fell short of estimates by 18%, but statutory losses were relatively mild, coming in 9.6% smaller than the analysts expected, at US$0.05 per share. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.

See our latest analysis for Cronos Group

After the latest results, the nine analysts covering Cronos Group are now predicting revenues of US$108.5m in 2022. If met, this would reflect a solid 15% improvement in sales compared to the last 12 months. Losses are forecast to narrow 3.2% to US$0.28 per share. Before this latest report, the consensus had been expecting revenues of US$117.1m and US$0.26 per share in losses. So it's pretty clear consensus is more negative on Cronos Group after the new consensus numbers; while the analysts trimmed their revenue estimates, they also administered a modest increase to per-share loss expectations.

The average price target was broadly unchanged at CA$6.17, perhaps implicitly signalling that the weaker earnings outlook is not expected to have a long-term impact on the valuation. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. Currently, the most bullish analyst values Cronos Group at CA$11.00 per share, while the most bearish prices it at CA$3.86. We would probably assign less value to the analyst forecasts in this situation, because such a wide range of estimates could imply that the future of this business is difficult to value accurately. With this in mind, we wouldn't rely too heavily the consensus price target, as it is just an average and analysts clearly have some deeply divergent views on the business.

Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. It's pretty clear that there is an expectation that Cronos Group's revenue growth will slow down substantially, with revenues to the end of 2022 expected to display 32% growth on an annualised basis. This is compared to a historical growth rate of 54% over the past five years. Juxtapose this against the other companies in the industry with analyst coverage, which are forecast to grow their revenues (in aggregate) 23% per year. So it's pretty clear that, while Cronos Group's revenue growth is expected to slow, it's still expected to grow faster than the industry itself.

The Bottom Line

The most important thing to take away is that the analysts increased their loss per share estimates for next year. They also downgraded their revenue estimates, although industry data suggests that Cronos Group's revenues are expected to grow faster than the wider industry. The consensus price target held steady at CA$6.17, with the latest estimates not enough to have an impact on their price targets.

Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have forecasts for Cronos Group going out to 2024, and you can see them free on our platform here.

We also provide an overview of the Cronos Group Board and CEO remuneration and length of tenure at the company, and whether insiders have been buying the stock, here.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.