What you need to know about Tilray (TLRY) before it reports earnings next week

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August 7, 2019 11:01am NYSE:MJ

NYSE:MJ | News, Ratings, and Charts

From Eric Bowler

Shares of Tilray (TLRY) are down roughly 40% from a year ago, when it debuted as one of the first Canadian-based cannabis companies to be traded on the Nasdaq stock exchange.

TLRY’s opening price on the NASDAQ was $23.05, and by September 19, 2018 the stock had skyrocketed to an all-time high of $300 per share. But this was also nearing the time of legalization in Canada, so TLRY’s stock seemed to move in sync with the rest of the cannabis sector.

Throughout 2019, cannabis stocks have released several earnings reports that are finally allowing investors to separate the wheat (or weed) from the chaff. While TLRY has been on the steady decline for most of 2019, the stock has seemed to stabilize in recent weeks.

Back in March, Jefferies analyst Owen Bennett opined that Tilray trailed behind its competitors in the medical cannabis market. He also implied that investors may be overvaluing Tilray’s beverage and retail partnerships.

The stock ticked slightly higher in May after beating quarterly sales expectations, but then took another dip in June. Since late June TLRY seems to have found its footing for now. With their next earning release anticipated for August 13, 2019, many investors on the edge of their seats.  

A look under the hood

Tilray primarily makes its money through four streams of revenue: the Canadian recreational market, the Canadian medical market, international medical markets, and food products.

In Q1, TLRY reported a loss per share of 32 cents, missing the estimate of 24 cents loss per share. Tilray’s Q1 revenue reached $23 million (including excise taxes).

After adjusting for taxes, Tilray’s revenue was $21.5 million, which beat expectations. Nonetheless, the net loss was $30 million, up from $5 million year-over-year.

Revenue from Tilray’s Canadian recreational and medical markets came in at around $7.88 million and $7.76 million, respectively. Their food products revenue was approximately $5.5 million. International medical totaled about $1.8 million.

It’s notable that nearly a quarter of Tilray’s revenue came from their food products segment. Last February, Tilray acquired Canadian-based hemp food manufacturer Manitoba Harvest.

The deal gave TLRY access to the U.S. cannabidiol (CBD) market, as Manitoba Harvest’s products are sold in retail stores both in Canada and the U.S.  All of Tilray’s food products revenue came from Manitoba Harvest.

Also, back in December 2018 the U.S. legalized hemp and the hemp-derived ingredient CBD, spurring more Canadian producers to try to cash in on this development.

However, it’s still illegal to transport CBD across the U.S.-Canada border, so like its competitors, Tilray will probably want to expand production on the U.S. side of the border if intends on remaining competitive in the U.S. market.

But like many of its peers in the cannabis sector, TLRY has high operating expenses. And the quarter-to-quarter cash burn has caused concern for many investors.

Earnings report next week 

Investors will be looking for good news in August 13 report. Analysts expect TLRY’s earnings to post a loss of $0.23 per share, which would mark a year-over-year decline of 35.29%.

Tilray Inc. Cl 2 (TLRY) was trading at $42.15 per share on Wednesday morning, down $0.38 (-0.89%). Year-to-date, TLRY has declined N/A%, versus a 7.44% rise in the benchmark S&P 500 index during the same period.

This article is brought to you courtesy of ETFDailyNews.com.

About the Author: Eric Bowler

eric-bowlerEric Bowler is an accomplished journalist providing in-depth insights for more than two decades. Over the past several years his focus has been on the marijuana industry, with a special interest in cannabis growth stocks. His daily coverage of the industry keeps him on top of the key trends with the goal of helping investors make well-informed decisions.

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