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Tilray (TLRY) to Report Q4 Earnings: What's in the Cards?

Zacks Equity Research
·4 min read

We expect investors to focus on sales numbers and pipeline updates, when Tilray, Inc. TLRY reports fourth-quarter 2019 results.

In the last reported quarter, the company missed earnings expectations by 72.4%. The company, which went public in July 2018, has a disappointing track record.

The company missed earnings estimates in the last four quarters, the average negative surprise being 56.67%.

Let us see how things have shaped up prior to the fourth-quarter earnings release.

Factors at Play

Tilray produces medical cannabis in Canada and Europe. Revenues increased significantly year over year during the third quarter on the Canadian adult-use market, the Manitoba Harvest acquisition, and growth in international medical markets as a result of the first GMP certification of the Portugal facility. This trend is expected to have continued in the fourth quarter as well.

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Notably, Tilray acquired Manitoba Harvest — a hemp and natural foods producer in Winnipeg, Manitoba — in the first quarter.  This is likely to have spurred demand for the company’s products in the December-end quarter.

Gross margin was up sequentially in the third quarter, with similar growth anticipated in the fourth quarter as well on solid revenues.

Apart from the top- and bottom-line numbers, investors will focus on the company’s collaboration deals to expand global footprint.

Tilray has established sales and distribution arrangements to supply medical cannabis through major pharmaceutical distribution channels throughout Germany and other European markets. These arrangements allow patients in need to access Tilray’s finished medical cannabis.

In December, Tilray announced that its wholly-owned subsidiary Tilray Portugal, Unipessoal Lda. has received the Good Manufacturing Practice (GMP) certification in accordance with 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 flower and oils, from Portugal to international markets with legal medical cannabis regulations.

Earlier the same month, per reports, Tilray announced plans to reduce its workforce by 10% to slash costs. We expect an update on the same.

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 77.7% in the past year compared with the industry’s decline of 7.2%.

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.

Aduro Biotech, Inc. ADRO has an Earnings ESP of +23.08% and flaunts a Zacks Rank #1, at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Perrigo Company plc PRGO has an Earnings ESP of +1.98% and currently holds a Zacks Rank of 2.

Sage Therapeutics, Inc. SAGE has an Earnings ESP of +2.74% and carries a Zacks Rank of 3. The company is scheduled to release earnings numbers on Feb 27.

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Perrigo Company plc (PRGO) : Free Stock Analysis Report
 
Sage Therapeutics, Inc. (SAGE) : Free Stock Analysis Report
 
Aduro Biotech, Inc. (ADRO) : Free Stock Analysis Report
 
Tilray, Inc. (TLRY) : Free Stock Analysis Report
 
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