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

Tilray, Inc. TLRY is expected to release first-quarter 2019 results on May 14.

In the last reported quarter, the company missed earnings expectations by 107.1%. The company went public in July 2018.

Pipeline Progress in Focus

Tilray produces medical cannabis in Canada and Europe. The company has two product categories — dried cannabis, which includes whole flower and ground flower, and cannabis extracts, which includes full-spectrum and purified oil drops and capsules.

The company recorded a 110% improvement in revenues in 2018. This increase was driven by bulk sales, the inaugural sales for the Canadian adult-use market and accelerated wholesale distribution in export markets. We expect the momentum to continue in the first quarter.

There is a global paradigm shift with regard to cannabis. Medical cannabis is now authorized at the national or federal level in 29 countries. Although the legal market for medical cannabis is still in its early stages, it represents huge potential.

Recreational cannabis was legalized on Oct 17, 2018. This in turn should boost demand for the company’s products in the first quarter. The company expects the adult-use market to represent a higher proportion of its revenues on legalization, as new consumers participate in and the previously-illicit consumers adopt Canada’s framework for the sale of cannabis.

Tilray has been working to expand its global footprint. The company expanded alliance with Sandoz, a Novartis NVS Division, in 2018 to make medical cannabis products more accessible to patients in need across the world. The company announced a research and development partnership with AB InBev. The deal focuses on non-alcohol THC and CBD beverages.  These partnerships will drive further revenues in the first quarter.

In February 2019, Tilray acquired FHF Holdings Ltd. (Manitoba Harvest), from Compass Group Diversified Holdings. Manitoba Harvest is the world’s largest hemp food manufacturer and a leader in the natural foods industry.

We expect investors to focus on other business updates from the company in the first-quarter earnings call, apart from the regular top and bottom-line numbers.

Earnings Whispers

Our proven model does not conclusively show that Tilray will beat on earnings this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) to be able to beat estimates. Unfortunately, that is not the case here, as you will see below.

Earnings ESP: The company’s Earnings ESP, which represents the difference between the Most Accurate Estimate and the Zacks Consensus Estimate, is +6.75%. This is because the Most Accurate Estimate stands at -$0.24 and the Zacks Consensus Estimate is -$0.25. You can uncover the best stocks to buy or sell, before they’re reported, with our Earnings ESP Filter.

Zacks Rank: Tilray currently carries a Zacks Rank #4 (Sell). Note that we caution against stocks with a Zacks Rank #4 or 5 (Strong Sell) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Share Price Performance

Tilray’s stock has lost 31.9% in the year so far compared with the industry’s growth of 8.8%.

Stocks to Consider

Here are some healthcare 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.