3 of the Dirtiest Words to Watch for in Cannabis Earnings Reports

November 12, 2021
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Banking, Finance & Real Estate
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Cannabis earnings season is here, and there are some terms you should watch out for as they could signal trouble.

Key Points

Investors should keep a close eye on these words as they can uncover problems under the hood of a company’s earnings report.
These terms can signify that a company could soon be diluting its existing shareholders or that its prices are falling.
If these words are showing up frequently on a company’s earnings report, it could be a sign to avoid the stock altogether.

Many cannabis companies are reporting their quarterly results in November. And for investors, it can sometimes be difficult to interpret the numbers as cannabis earnings reports are often littered with adjustments and gains or losses, making it challenging to determine whether the company really had a good quarter.But there are some ways you can quickly scan beyond just how the company did on its top and bottom lines to see whether there are any problems you need to be paying close attention to. Here are three words you don’t want to see come up on an earnings report or call.

Impairment

Impairment charges or write-downs are, unfortunately, common on many earnings reports in the cannabis industry. And while it is excluded from adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) calculations, that doesn’t mean investors should ignore it. That’s because an impairment charge or write-down means that an asset’s value on the balance sheet is incorrect or has changed. [Read More @ The Motley Fool]