Cronos Group Inc. (NASDAQ: CRON)

Sector: Healthcare Industry: Drug Manufacturers - Specialty & Generic CIK: 0001656472
Market Cap 816.60 Mn
P/B 0.75
P/E 22.62
P/S 6.17
ROIC (Qtr) -2.07
Div Yield % 0.00
Rev 1y % (Qtr) 6.06
Total Debt (Qtr) 576,000.00
Debt/Equity (Qtr) 0.00
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About

Cronos Group Inc., a Canadian company with the ticker symbol CRON, is a prominent player in the global cannabinoid industry. The company is dedicated to constructing a portfolio of iconic brands that offer responsible and elevated consumer experiences. Cronos operates in the cannabis industry, a sector characterized by rapid evolution and stringent regulations. Cronos' primary business activities revolve around the production and distribution of cannabis products. The company's offerings include dried flower, pre-rolls, vaporizers, and edibles,...

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Investment thesis

Bull case

  • Strong operating cash flow of 21.75M provides robust 37.76x coverage of total debt 576000, indicating excellent debt servicing capability and financial flexibility.
  • Healthy cash reserves of 784.17M provide 1361.41x coverage of short-term debt 576000, demonstrating strong liquidity position and minimal refinancing risk.
  • Strong tangible asset base of 1.10B provides 1915.22x coverage of total debt 576000, indicating robust asset backing and low credit risk.
  • Cash position of 784.17M provides exceptional 145.08x coverage of minority interest expenses 5.41M, indicating strong liquidity.
  • Short-term investments of 40.18M provide solid 1.36x coverage of other current liabilities 29.63M, indicating strong liquidity.

Bear case

  • Operating cash flow of 21.75M barely covers its investment activities of (84.37M), with a coverage ratio of -0.26, indicating heavy reliance on external financing for growth which may not be sustainable in a tighter credit environment.
  • Investment activities of (84.37M) provide weak support for R&D spending of 4.09M, which is -20.60x, suggesting potentially insufficient investment in innovation relative to other capital deployment.
  • The company's operating cash flow of 21.75M shows concerning coverage of stock compensation expenses of 7.99M, with a 2.72 ratio indicating potential earnings quality issues.
  • Operating cash flow of 21.75M provides minimal -74.49x coverage of tax expenses of (292000), suggesting potential tax planning inefficiencies or unsustainable tax positions.
  • Free cash flow of (5.37M) provides weak coverage of capital expenditures of 27.12M, with a -0.20 ratio suggesting additional external financing needs for growth initiatives.

Peer comparison

Companies in the Drug Manufacturers - Specialty & Generic
S.No. Ticker Company Market Cap P/E P/S Total Debt (Qtr)
1 ZTS Zoetis Inc. 59.62 Bn 29.27 7.67 9.24 Bn
2 TAK Takeda Pharmaceutical Co Ltd 57.33 Bn 79.02 2.00 36.56 Bn
3 HLN Haleon plc 51.85 Bn 33.06 3.83 -
4 TEVA Teva Pharmaceutical Industries Ltd 39.45 Bn 27.98 2.29 17.09 Bn
5 UTHR UNITED THERAPEUTICS Corp 21.54 Bn 16.94 6.89 0.00 Bn
6 RGC Regencell Bioscience Holdings Ltd 16.16 Bn -4,510.00 0.00 -
7 ELAN Elanco Animal Health Inc 12.79 Bn 355.14 2.78 4.32 Bn
8 NBIX Neurocrine Biosciences Inc 12.71 Bn 26.56 4.44 0.42 Bn

Industry comparisons

Current Valuation Value Ind Avg Percentile
EV to Assets EV to Assets 0.02 38.12
EV to Cash from Ops. EV/CFO 0.91 -121.97
EV to Debt EV to Debt 34.30 403.43
EV to EBIT EV/EBIT -3.06 -55.05
EV to EBITDA EV/EBITDA -2.42 -57.64
EV to Free Cash Flow [EV/FCF] EV/FCF -3.68 -65.56
EV to Market Cap EV to Market Cap 0.02 -4.24
EV to Revenue EV/Rev 0.15 -1,205.44
Price to Book Value [P/B] P/B 0.75 43.48
Price to Earnings [P/E] P/E 22.62 -46.00
Dividend Metrics Value Ind Avg Percentile
Dividend Coverage Ratio Dividend Coverage Ratio 0.00 0.36
Dividend Payout Ratio % Div Payout % (Qtr) 0.00 0.52
Dividend per Basic Share Div per Share (Qtr) 0.00 0.07
FCF Dividend Payout Ratio % FCF Div Payout % (Qtr) 0.00 4.04
Interest Coverage Int. cover (Qtr) 0.15 -46.13
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex 1y % (Qtr) -168.90 -154.90
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) -9.03 86,151.29
Dividend Growth (1y) % Dividend Growth (1y) % 0.00 2.89
EBIAT Growth (1y) % EBIAT 1y % (Qtr) 93.21 31.16
EBITDA Growth (1y) % EBITDA 1y % (Qtr) 89.64 9.88
EBIT Growth (1y) % EBIT 1y % (Qtr) 94.00 91.77
EBT Growth (1y) % EBT 1y % (Qtr) 167.26 90.13
EPS Growth (1y) % EPS 1y % (Qtr) 0.00 -12.06
FCF Growth (1y) % FCF 1y % (Qtr) -130.08 -224.48
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr) 251.92 26.23
Liquidity Ratios Value Ind Avg Percentile
Asset Utilization Ratio Asset Util Ratio (Qtr) 0.11 0.49
Cash Payout Ratio Cash Payout (Qtr) 0.00 0.02
Cash Ratio Cash Ratio (Qtr) 19.09 2.12
Current Ratio Curr Ratio (Qtr) 22.46 3.92
Debt to Equity Ratio Debt/Equity (Qtr) 0.00 -1.15
Interest Cover Ratio Int Coverage (Qtr) 0.15 -46.13
Times Interest Earned Times Interest Earned (Qtr) 0.15 -46.13
Profitability Value Ind Avg Percentile
EBITDA Margin % EBITDA Margin % (Qtr) 5.00 -59,714.97
EBIT Margin % EBIT Margin % (Qtr) -4.88 -60,539.44
EBT Margin % EBT Margin % (Qtr) 27.05 -64,118.78
Gross Margin % Gross Margin % (Qtr) 43.40 8,658.69
Net Profit Margin % Net Margin % (Qtr) 27.30 -64,120.53