CGC Stock: Strong Q1 Results Combine with Massive Investment Deal to Send Canopy Soaring

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Canopy Growth Quarterly Report

There is no company hotter right now in the legal marijuana industry than Canopy Growth Corp (NYSE:CGC). After having scored a CA$5.0-billion investment deal with Constellation Brands, Inc. (NYSE:STZ) that virtually pulled the entire industry up from the marijuana correction, Canopy Growth stock followed it up with a stellar quarterly report for Q1 2019.

The company saw a first-quarter revenue of CA$25.9 million, which was a 14% increase from the previous quarter and a 63% increase from the previous year. (Source: “Canopy Growth Corporation Reports First Quarter Fiscal 2019 Financial Results,” Cision, August 14, 2018.)

Another big metric worth mentioning is the average selling price per gram, hitting CA$8.94, up from CA$8.43 last quarter and CA$7.96 last year. This number helps track profit per gram production, making it one of the stronger metrics when used in comparison to rival companies. Seeing strong growth here is critical.

Canopy Growth stock also netted multi-year supply agreements with annualized delivery requirements of over 67,000 kilograms within Canada as marijuana legalization in that country approaches.

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Bruce Linton, Chairman and Co-CEO said the following:

With our unparalleled success in Canada and Europe, Spectrum Cannabis’ expanding global operational footprint now covering 11 countries, our active regulatory and global market development efforts, as well as approvals to proceed with the first of many planned clinical trials of cannabis-based medical therapies for both humans and animals, our leadership position in international medical cannabis markets continues to strengthen.

(Source: Ibid.)

But the quarterly report, as good as it is, is only secondary to the true driver of CGC stock right now: the Constellation deal.

The massive injection of investment capital has reinvigorated the entire cannabis industry, but no company has benefited more than Canopy Growth Corp.

Canopy Growth stock shot up 50% in five days. These types of gains are enough to make every other industry jealous.

Of course, it was a long slog to get there during the marijuana correction, but gaining half of your investment’s value in a week is exactly what makes people salivate over the marijuana industry in the first place.

Canopy Growth Stock First-Quarter 2019 Highlights

Q1 2019 Q4 2018 Percentage Difference Q1 2018 Percentage Difference

Active Registered Patients

82,700

74,000

11.7%

59,000

40.2%

Kilograms and Kilogram Equivalents Sold

2,695

2,528

6.6%

1,830

47.3%

Kilograms Harvested

9,685

4,811

101.3%

5,575

73.7%

Inventory & Biological Assets (Millions)

CA$171.0

CA$118.0

44.9%

CA$75.0

128%

Revenue (Millions)

CA$25.9

CA$22.8

13.6%

CA$15.9

62.9%

Average Selling Price per Gram

CA$8.94

CA$8.43

6.1%

CA$7.96

12.3%

Cash & Cash Equivalents (Millions)

CA$658.0

CA$323.0

103.7%

CA$115.0

472.2%

(Source: Ibid.)

Analyst Take

Canopy Growth stock remains one of my favorite picks in the legal cannabis industry.

I’ve long been a supporter of the company, due to its strong position as an industry leader coupled with savvy moves that have only helped solidify its status as the marijuana top dog.

These moves include joining the New York Stock Exchange, expanding its global reach to Germany and South America, and being on the receiving end of a massive alcohol-company partnership.

And that’s just in 2018.

The company’s recent quarterly report reflects Canopy’s success. Success that, I believe, will continue well into the future.