TLRY Earnings are on a roll and can cause the Tilray Stock to move higher

Today we are looking at the Tilray Stock (NASDAQ: TLRY), to determine if it is a good buy. We will look at TLRY financial ratios, analyst ratings, and valuation to determine a TLRY stock forecast and price. What does TLRY Do? Tilray Brands Inc. engages in the research, cultivation, production, marketing, and distribution of medical cannabis products. It operates through five segments: Cannabis Business, Distribution Business, Beverage Alcohol Business, Wellness Business, and Business Under Development. The company provides medical and adult-use cannabis products; pharmaceutical and wellness products; beverage alcohol products; and hemp-based food and other wellness products. It offers its products to retailers, whole... Gathering Information for a Tilray Stock Forecast Who are Tilray Brands, Inc.'s Competitors? In order to undergo a comparable analysis (to determine TLRY stocks value), we need to first outline who TLRY's competitors are. These competitors need to be publicly listed, have valid financial metrics/multiples, operate in a similar manner to TLRY, and have a market cap similar to TLRY (if possible). By keeping this in mind, I found the following list of companies to be some of Tilray stocks closest competitors: ACB, CGC, OGI, and SNDL  Tilray Stock News and Financials Has TLRY Stock Been Mentioned in the News Recently? Tilray recently renegotiated the terms of a merger with HEXO, in which, "Tilray reiterated a target of up to C$80 million ($61.9 million) in cost savings for the deal, which it said will add to earnings upon the expected closing date on or around July 15. The initial conversion price of the Hexo note will be adjusted down to 40 cents a share from 85 cents a share, under the revised terms." This is great news for Tilray as they can use HEXO for continued growth, while managing to save some money, which should help with their earnings. HEXO offers its adult-use and medical cannabis products under the HEXO, UP Cannabis, and Original Stash brands. Futhermore, HEXO also provides cannabis beverages under the Little Victory, House of Terpenes, Mollo, Veryvell, and XMG brand. The fact that HEXO offers cannabis beverages is big for Tilray as they have been looking to expand into this marekt since 2018, and this acquisition just helps them toward their goals of leading this market. Currently, 5% of TLRY's revenues come from this market (all from their "SweetWater" brand), and we will be sure to keep an eye on this figure in future financial reports to note it's growth. Furthemore,the Cannabis beverage market has proven to be the most profitable for TLRY as their margins were 59% in 2021 (highest out of all segments). From Terrible to Profitable: A TLRY Earnings Story TLRY Earnings (Yearly): TLRY Revenues: In FY 2021, TLRY experienced a yearly increase in revenues of $122.09M (or 31.23%) resulting in a total revenue figure of $513.09M. TLRY Cost of Revenues: In FY 2021, TLRY experienced a yearly increase in their cost of revenues of $136.59M (53.92%), resulting in a total revenue figure of $389.9M. Since the increase (of 53.92%), in TLRY's cost of revenue was greater (by 22.7%) than the increase (of 31.23%) in TLRY's revenues, we should expect that TLRY experienced an decrease in their FY gross profits. TLRY Gross Profit: In FY 2021, TLRY experienced a yearly decrease in their gross profit of $-14.5M (or -10.53%) resulting in a total gross profit of $123.18M. This decrease is consistent with our conclusion from the comparison of revenues and cost of revenues between FY and FY. TLRY EBITDA: In FY 2021, TLRY experienced a yearly decrease in their EBITDA of $-293.52M (or -1,850%) resulting in a total EBITDA of $-277.66M. This decrease (of -1,850%) stems from the fact that TLRY experienced a decrease in their gross profits of -10.53% (as we saw in the previous bullet point). This large decrease in TLRY's EBITDA stems from the fact that their "transaction expenses" increased from $4.3b in 2020 to $63.6B (+1,380%). This was due to the puchase of the "SweetWater" brand, and increased litigation costs. TLRY Net Income: In FY 2021, TLRY experienced a yearly decrease in their net income of -$235,181,000 resulting in a total net income of $-367.42M. TLRY EPS: As a result of TLRY's decrease in net income of -$235,181,000, TLRY's EPS also decreased (by -$0.54) from $-0.28 in FY 2020 to $-0.82 in FY 2021 Overall, while Tilray experinced a very respectable 30% growth in their revenues, their 2021 earnings report fell short,  and was rather poor. This poor performance stems from the fact that TLRY experienced a large decrease in their EBITDA, which was a result of their acquisition of SweetWater, and some litigation costs. I think that the acquisition of Sweetwater was great news and signifies a brighter and more profitable future for TLRY. To get a better idea of how this acquisition, and others have impacted TLRY since 2021, we can take a look at their Q3 2022 earnings report. TLRY Earnings (Quarterly): TLRY Revenues: In Q3 2022, TLRY experienced a quarterly decrease in revenues of $-3.28M (or -2.12%) resulting in a total revenue figure of $151.87M. TLRY Cost of Revenues: In Q3 2022, TLRY experienced a quarterly decrease in their cost of revenues of $-10.35M (-8.45%), resulting in a total revenue figure of $112.04M. Since the decrease (of -8.45%), in TLRY's cost of revenue was lesser (by -6.34%) than the decrease (of -2.12%) in TLRY's revenues, we should expect that TLRY experienced an increase in their Q3 gross profits. TLRY Gross Profit: In Q3 2022, TLRY experienced a quarterly increase in their gross profit of $7.06M (or 21.56%) resulting in a total gross profit of $39.83M. This increase is consistent with our conclusion from the comparison of revenues and cost of revenues between Q3 and Q2. TLRY EBITDA: In Q3 2022, TLRY experienced a quarterly increase in their EBITDA of $34.53M (or 83.12%) resulting in a total EBITDA of $76.07M. This increase (of 83.12%) stems from the fact that TLRY experienced a increase in their gross profits of 21.56% (as we saw in the previous bullet point). This positive EBITDA is something very important to note, especially since their 2021 EBITDA was -$277M. TLRY Net Income: In Q3 2022, TLRY experienced a quarterly increase in their net income of $43,391,000 resulting in a total net income of $43.19M. TLRY EPS: As a result of TLRY's increase in net income of $43,391,000, TLRY's EPS also increased (by $0.09) from $0 in Q2 2022 to $0.09 in Q3 2022 Overall, it seems as though TLRY had a great financial performance  as many of their financial metrics grew, most notably their EPS (by $0.09), as well as their net income (by $43,391,000), and other metrics (as you can tell from the above bullet points). However, TLRY stock missed their EPS estimate by $0.17 (or 200+%), as they reported an EPS of $0.09 for the quarter (compared to their estimated EPS of -$0.08). Overall, since TLRY had a great earnings (on paper) and were able to beat their EPS estimate, it is safe to say that TLRY had a great Q3 2022 earnings report, and has seemed to turn their business around, and continue becoming more profitable. Is TLRY Share Dilution Slowing Quickly Enough? As part of their Q3 2022 earnings release, TLRY stated that they currently have 485.67M Shares Outstanding (weighted average), which is up 25.41M shares (from 460.25M shares outstanding in Q2 2022). This is represents a quarterly dilution figure of 5.5% which is very high. Investors should make note of this, and should be worried about future dilution. Furthermore, over the past year they have diluted shares by 8.85%, which is less worrying than a 5.5% quarter, but still rather high. Hopefully, their dilution will continue to slow (as it has done over the past year) and this becomes less and less of a problem. However, given their current figures Tilray Stock dilution still seems to be an issue. What are Analysts Rating TLRY Stock as? Here is the current spread of TLRY stock ratings. In total there are 24 TLRY stock ratings, which fall in the following categories. 5 Buys 15 Holds 4 Sells Analyst Ratings have provided relatively strong indicators of future price movement, which is why they are used to determine if TLRY stock is a buy or sell. Overall, this is quite te mixed board of Tilray stock ratings, as there are almost an equal number of "buys" and "sells", but an overwhelming majority of "Holds". I think that this is more bearish than anything as analysts typically tend to take a more bullish approach when giving stock ratings. My TLRY Stock Prediction Using a Comparable Analysis to Determine a TLRY Price Forecast Price to Book (P/B): TLRY's current P/B ratio is 0.33, compared to the average P/B ratio of TLRY's peers being 0.51. This implies that TLRY is undervalued and their share price should change by a factor of 54.5% to be at fair value (based on TLRY's P/B compared to the P/B of their peers). Enterprise Value to Sales (EV/Sales): TLRY stock EV/Sales ratio is currently 1.94, compared to the average EV/Sales ratio of TLRY's peers being 2.27. This implies that TLRY is overvalued and their share price should change by a factor of 19.5% to be at fair value (based on TLRY's EV/Sales compared to the EV/Sales of their peers). Overall, TLRY stock is undervalued and needs to experience a change in stock price of (an average of) 37% to be considered “at fair value”. Overall it seems as though TLRY has some pretty solid/healthy financial ratios, which is a good indicator of their financial health. Is TLRY a good stock to buy right now? Overall, there are many positive aspects to the Tilray Stock, such as my TLRY stock forecast implies that TLRY is undervalued and needs to experience a price change of 37% in order to be at their fair value, their quarterly financials were great, and they recently have saved $80M on an acquistion. However, there are also a fair share of negative aspects of the Tilray Stock, such as their high share dilution, their poor 2021 financial report, and mixed analyst ratings. In an attempt to balance these positives and negatives, I have concluded the following: I think that TLRY is currently a good buy. This is mainly due to their recent earnings report giving hope that they have turned around their business and have found a path to profitability. Furthermore, they have focused on growing their Cannabis Beverage segment, which is their current most profitable segment. This should help TLRY continue to become more and more profitable, which is great news/hope for investors. Furthermore, the comparable analysis indicated that TLRY is in fact undervalued right now. There is only one thing that I am scared of when considering an investment into TLRY, which is their aggressive dilution (due to their aggresive outlook on acquisitions). Due to the fear of dilution, I would consider exiting a position in TLRY at a +20% return.

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TLRY Earnings are on a roll and can cause the Tilray Stock to move higher

Jun 15, 2022

bullish

general Analysis

[8 min Read]

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Photo by: Ryan Lange

Today we are looking at the Tilray Stock (NASDAQ: TLRY), to determine if it is a good buy. We will look at TLRY financial ratios, analyst ratings, and valuation to determine a TLRY stock forecast and price.

What does TLRY Do?

Tilray Brands Inc. engages in the research, cultivation, production, marketing, and distribution of medical cannabis products. It operates through five segments: Cannabis Business, Distribution Business, Beverage Alcohol Business, Wellness Business, and Business Under Development. The company provides medical and adult-use cannabis products; pharmaceutical and wellness products; beverage alcohol products; and hemp-based food and other wellness products. It offers its products to retailers, whole...

Gathering Information for a Tilray Stock Forecast

Who are Tilray Brands, Inc.'s Competitors?

In order to undergo a comparable analysis (to determine TLRY stocks value), we need to first outline who TLRY's competitors are.

These competitors need to be publicly listed, have valid financial metrics/multiples, operate in a similar manner to TLRY, and have a market cap similar to TLRY (if possible).

By keeping this in mind, I found the following list of companies to be some of Tilray stocks closest competitors:

ACB, CGC, OGI, and SNDL

Tilray Stock News and Financials

Has TLRY Stock Been Mentioned in the News Recently?

Tilray recently renegotiated the terms of a merger with HEXO, in which, "Tilray reiterated a target of up to C$80 million ($61.9 million) in cost savings for the deal, which it said will add to earnings upon the expected closing date on or around July 15. The initial conversion price of the Hexo note will be adjusted down to 40 cents a share from 85 cents a share, under the revised terms." This is great news for Tilray as they can use HEXO for continued growth, while managing to save some money, which should help with their earnings.

HEXO offers its adult-use and medical cannabis products under the HEXO, UP Cannabis, and Original Stash brands. Futhermore, HEXO also provides cannabis beverages under the Little Victory, House of Terpenes, Mollo, Veryvell, and XMG brand. The fact that HEXO offers cannabis beverages is big for Tilray as they have been looking to expand into this marekt since 2018, and this acquisition just helps them toward their goals of leading this market. Currently, 5% of TLRY's revenues come from this market (all from their "SweetWater" brand), and we will be sure to keep an eye on this figure in future financial reports to note it's growth. Furthemore,the Cannabis beverage market has proven to be the most profitable for TLRY as their margins were 59% in 2021 (highest out of all segments).

From Terrible to Profitable: A TLRY Earnings Story

TLRY Earnings (Yearly):

  • TLRY Revenues: In FY 2021, TLRY experienced a yearly increase in revenues of $122.09M (or 31.23%) resulting in a total revenue figure of $513.09M.
  • TLRY Cost of Revenues: In FY 2021, TLRY experienced a yearly increase in their cost of revenues of $136.59M (53.92%), resulting in a total revenue figure of $389.9M. Since the increase (of 53.92%), in TLRY's cost of revenue was greater (by 22.7%) than the increase (of 31.23%) in TLRY's revenues, we should expect that TLRY experienced an decrease in their FY gross profits.
  • TLRY Gross Profit: In FY 2021, TLRY experienced a yearly decrease in their gross profit of $-14.5M (or -10.53%) resulting in a total gross profit of $123.18M. This decrease is consistent with our conclusion from the comparison of revenues and cost of revenues between FY and FY.
  • TLRY EBITDA: In FY 2021, TLRY experienced a yearly decrease in their EBITDA of $-293.52M (or -1,850%) resulting in a total EBITDA of $-277.66M. This decrease (of -1,850%) stems from the fact that TLRY experienced a decrease in their gross profits of -10.53% (as we saw in the previous bullet point). This large decrease in TLRY's EBITDA stems from the fact that their "transaction expenses" increased from $4.3b in 2020 to $63.6B (+1,380%). This was due to the puchase of the "SweetWater" brand, and increased litigation costs.
  • TLRY Net Income: In FY 2021, TLRY experienced a yearly decrease in their net income of -$235,181,000 resulting in a total net income of $-367.42M.
  • TLRY EPS: As a result of TLRY's decrease in net income of -$235,181,000, TLRY's EPS also decreased (by -$0.54) from $-0.28 in FY 2020 to $-0.82 in FY 2021

Overall, while Tilray experinced a very respectable 30% growth in their revenues, their 2021 earnings report fell short, and was rather poor. This poor performance stems from the fact that TLRY experienced a large decrease in their EBITDA, which was a result of their acquisition of SweetWater, and some litigation costs. I think that the acquisition of Sweetwater was great news and signifies a brighter and more profitable future for TLRY. To get a better idea of how this acquisition, and others have impacted TLRY since 2021, we can take a look at their Q3 2022 earnings report.

TLRY Earnings (Quarterly):

  • TLRY Revenues: In Q3 2022, TLRY experienced a quarterly decrease in revenues of $-3.28M (or -2.12%) resulting in a total revenue figure of $151.87M.
  • TLRY Cost of Revenues: In Q3 2022, TLRY experienced a quarterly decrease in their cost of revenues of $-10.35M (-8.45%), resulting in a total revenue figure of $112.04M. Since the decrease (of -8.45%), in TLRY's cost of revenue was lesser (by -6.34%) than the decrease (of -2.12%) in TLRY's revenues, we should expect that TLRY experienced an increase in their Q3 gross profits.
  • TLRY Gross Profit: In Q3 2022, TLRY experienced a quarterly increase in their gross profit of $7.06M (or 21.56%) resulting in a total gross profit of $39.83M. This increase is consistent with our conclusion from the comparison of revenues and cost of revenues between Q3 and Q2.
  • TLRY EBITDA: In Q3 2022, TLRY experienced a quarterly increase in their EBITDA of $34.53M (or 83.12%) resulting in a total EBITDA of $76.07M. This increase (of 83.12%) stems from the fact that TLRY experienced a increase in their gross profits of 21.56% (as we saw in the previous bullet point). This positive EBITDA is something very important to note, especially since their 2021 EBITDA was -$277M.
  • TLRY Net Income: In Q3 2022, TLRY experienced a quarterly increase in their net income of $43,391,000 resulting in a total net income of $43.19M.
  • TLRY EPS: As a result of TLRY's increase in net income of $43,391,000, TLRY's EPS also increased (by $0.09) from $0 in Q2 2022 to $0.09 in Q3 2022

Overall, it seems as though TLRY had a great financial performance as many of their financial metrics grew, most notably their EPS (by $0.09), as well as their net income (by $43,391,000), and other metrics (as you can tell from the above bullet points).

However, TLRY stock missed their EPS estimate by $0.17 (or 200+%), as they reported an EPS of $0.09 for the quarter (compared to their estimated EPS of -$0.08).

Overall, since TLRY had a great earnings (on paper) and were able to beat their EPS estimate, it is safe to say that TLRY had a great Q3 2022 earnings report, and has seemed to turn their business around, and continue becoming more profitable.

Is TLRY Share Dilution Slowing Quickly Enough?

As part of their Q3 2022 earnings release, TLRY stated that they currently have 485.67M Shares Outstanding (weighted average), which is up 25.41M shares (from 460.25M shares outstanding in Q2 2022). This is represents a quarterly dilution figure of 5.5% which is very high. Investors should make note of this, and should be worried about future dilution. Furthermore, over the past year they have diluted shares by 8.85%, which is less worrying than a 5.5% quarter, but still rather high. Hopefully, their dilution will continue to slow (as it has done over the past year) and this becomes less and less of a problem. However, given their current figures Tilray Stock dilution still seems to be an issue.

What are Analysts Rating TLRY Stock as?

Here is the current spread of TLRY stock ratings. In total there are 24 TLRY stock ratings, which fall in the following categories.

  • 5 Buys
  • 15 Holds
  • 4 Sells

Analyst Ratings have provided relatively strong indicators of future price movement, which is why they are used to determine if TLRY stock is a buy or sell. Overall, this is quite te mixed board of Tilray stock ratings, as there are almost an equal number of "buys" and "sells", but an overwhelming majority of "Holds". I think that this is more bearish than anything as analysts typically tend to take a more bullish approach when giving stock ratings.

My TLRY Stock Prediction

Using a Comparable Analysis to Determine a TLRY Price Forecast

  1. Price to Book (P/B): TLRY's current P/B ratio is 0.33, compared to the average P/B ratio of TLRY's peers being 0.51. This implies that TLRY is undervalued and their share price should change by a factor of 54.5% to be at fair value (based on TLRY's P/B compared to the P/B of their peers).
  2. Enterprise Value to Sales (EV/Sales): TLRY stock EV/Sales ratio is currently 1.94, compared to the average EV/Sales ratio of TLRY's peers being 2.27. This implies that TLRY is overvalued and their share price should change by a factor of 19.5% to be at fair value (based on TLRY's EV/Sales compared to the EV/Sales of their peers).

Overall, TLRY stock is undervalued and needs to experience a change in stock price of (an average of) 37% to be considered “at fair value”. Overall it seems as though TLRY has some pretty solid/healthy financial ratios, which is a good indicator of their financial health.

Is TLRY a good stock to buy right now?

Overall, there are many positive aspects to the Tilray Stock, such as my TLRY stock forecast implies that TLRY is undervalued and needs to experience a price change of 37% in order to be at their fair value, their quarterly financials were great, and they recently have saved $80M on an acquistion. However, there are also a fair share of negative aspects of the Tilray Stock, such as their high share dilution, their poor 2021 financial report, and mixed analyst ratings. In an attempt to balance these positives and negatives, I have concluded the following:

I think that TLRY is currently a good buy. This is mainly due to their recent earnings report giving hope that they have turned around their business and have found a path to profitability. Furthermore, they have focused on growing their Cannabis Beverage segment, which is their current most profitable segment. This should help TLRY continue to become more and more profitable, which is great news/hope for investors. Furthermore, the comparable analysis indicated that TLRY is in fact undervalued right now. There is only one thing that I am scared of when considering an investment into TLRY, which is their aggressive dilution (due to their aggresive outlook on acquisitions). Due to the fear of dilution, I would consider exiting a position in TLRY at a +20% return.

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TLRY

Tilray Brands, Inc.

3.15

0
0.00%

Return

-0.68%
Change % Since Posting
-0.02
Change Since Posting
3.17
Price When Posted

Metrics

3.48
Target Price
8/ 10
Confidence
6-12 Months
Timeframe
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Earnings Release
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News
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SEC
Filing
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Sentiment
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