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Tilray (TLRY) to Report Q1 Earnings: What's in the Cards?

Zacks Equity Research

Tilray, Inc. TLRY is scheduled to report first-quarter 2020 results on May 11, after market close.

In the last reported quarter, the company missed earnings expectations by 82.3%. The company, which went public in July 2018, has a disappointing track record.

Tilray missed earnings estimates in the last four quarters, the average negative surprise being 50.47%.

Let us see how things have shaped up prior to this announcement.

Factors at Play

Tilray produces medical cannabis in Canada and Europe. Revenues increased significantly year over year in the last reported quarter on the Canadian adult-use market, the Manitoba Harvest acquisition and growth in international medical markets. This trend is expected to have continued in the to-be-reported quarter.

Notably, Tilray acquired Manitoba Harvest — a hemp and natural foods producer in Winnipeg, Manitoba — in 2019. The company now has hemp products available in more than 17,000 retail doors and 20 countries around the world. This is likely to have spurred demand for the company’s products in the first quarter.

Total cannabis kilogram equivalents sold increased more than seven-fold in the last reported quarter due to a shift in product and channel mix and the same has most likely benefited the company in the first quarter.

However, an increase in operating expenses related to growth initiatives, expansion of international teams, and the addition of Manitoba Harvest and Natura Naturals businesses might have adversely impacted the gross margin.
Apart from the top and bottom-line numbers, investors will focus on the company’s collaboration deals to expand the global footprint.

In December, the company announced that its wholly-owned subsidiary Tilray Portugal, UnipessoalLda, received the Good Manufacturing Practice (GMP) certification in accordance with the European Union standards, for the Cantanhede, Portugal-based manufacturing facility. This is the second GMP certification for Tilray Portugal, which allows the facility to manufacture and export GMP-certified finished medical cannabis products, including dried flowers and oils, from Portugal to international markets with legal medical cannabis regulations.

Moreover, investors will be keen to know if the coronavirus pandemic has impacted the company’s business.

Earnings Whispers

Our proven model does not conclusively predict an earnings beat for Tilray this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. Unfortunately, that is not the case here, as you will see below. You can uncover the best stocks to buy or sell before they're reported with our Earnings ESP Filter.

Earnings ESP: Earnings ESP for Tilray is 0.00%.

Zacks Rank: The company currently carries a Zacks Rank of 3.

Share Price Performance

Tilray’s stock has depreciated 54.1% in the year so far compared with the industry’s decline of 11.8%.

 

Stocks to Consider

Here are a few stocks you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat this quarter.

Sage Therapeutics SAGE has an Earnings ESP of +1.67% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Alexion Pharmaceuticals ALXN has an Earnings ESP of +1.08% and a Zacks Rank #2.

Alnylam Pharmaceuticals, Inc. ALNY has an Earnings ESP of +4.44% and a Zacks Rank #3.

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