During a year in which pot stocks have cratered, the outlook for earnings has become hazier than almost any other sector.

The average spread between the highest and lowest analyst estimate for full-year earnings per share is $1.15 (US$0.88) for the 10 largest cannabis stocks, wider than any other sector on the S&P/TSX Composite Index excluding financials, according to data compiled by Bloomberg.

For example, full-year adjusted EPS estimates for Canopy Growth Corp., the largest pot company by market value, range from a loss of $5.47 to a loss of 44 cents. Cronos Group Inc.’s estimates range from a loss of $1.40 to a profit of $2.14.

By comparison, the average spread for consumer staples is 27 cents and the average spread for energy is 79 cents.

It’s an indication of how difficult it is to get a handle on the outlook for an emerging sector when there’s still plenty of uncertainty about what the future holds, said Greg Taylor, chief investment officer at Purpose Investments Inc. and manager of the Purpose Marijuana Opportunities Fund.

“A lot of these companies rushed out to become public and are really learning on the fly about how to do a lot of things, and one of those is how to handle expectations,” Taylor said. “When you’re an analyst it’s hard to have a ton of confidence in guidance, or you might not be getting any guidance at all.”

Hexo Stumble

That uncertainty has taken a toll on valuations. Pot stocks have lost more than half their value since their highs earlier this year, with the Horizons Marijuana Life Sciences Index ETF down about 53 per cent since March 19.

Hexo Corp., for example, recently cut its fiscal fourth-quarter revenue guidance to a range of $14.5 million to $16.5 million after previously saying it would double from the third-quarter level of $13 million. It also withdrew its fiscal 2020 guidance for $400 million in sales and announced Thursday it would cut about 200 of its 822 staff members.

Analysts who cover Hexo have steadily cut their average earnings per share outlook for the current year, from a loss of 7.6 cents in January to a loss of 21 cents today.

“This is a sector that’s relatively new and a lot of the analysts who have been bullish over the last year have been burned already,” Taylor said. “That’s why you’re getting a wider range -- you might get a few who are still newer to the names and want to take a risk, but most have been so disappointed with the recent performance that they’ve put lower expectations in their models.”