Canadian pot producer Tilray (TLRY) reports fiscal second-quarter earnings on Monday. Is there any reason to buy TLRY stock now?
Wall Street expects Tilray to lose eight cents per share during the quarter, potentially continuing a string of losses for the company and industry after overexpanding.
Sales were expected to come in at $170.5 million. But for a company focused on selling cannabis, its pharma distribution business — which it absorbed when it merged with rival Aphria last year — in prior quarters has been a big contributor to the top line.
And despite the company’s efforts to bulk up, its market share has been shrinking, amid stiffer competition in Canada.
Tilray last month bought Colorado-based Breckenridge Distillery, a move that adds to a U.S. presence that consists of a craft brewer and hemp-granola maker, along with an investment deal with struggling cannabis retailer MedMen.
Tilray hopes that it can use the consumer-goods companies it owns in the U.S. as a conduit for introducing THC cannabis products once pot is federally legalized. Some analysts have raised questions about that approach. Hopes of legalization in the U.S., which occasionally lifted marijuana stocks in the wake of the 2020 election cycle, have faded.
Below, we take a closer look at TLRY stock.
TLRY Stock Fundamental Analysis
Earnings growth is a staple of top stocks. But the EPS Rating of TLRY stock stands at 48, with 99 being the best possible. Other Canadian marijuana stocks also have not-great profit ratings, as they continue to lose money. The EPS Rating is a gauge of a company’s profit growth.
The Composite Rating of TLRY stock stands at 18, according to Marketsmith chart analysis. IBD research says investors should focus on stocks with Composite Ratings of 90 or higher.
Analysts expect Tilray to lose money through this fiscal year, which concludes around the end of May. They see it losing money in the fiscal year after that.
The company’s SMR Rating — or Sales + Margins + Return on Equity rating — is a not-great D. The rating tallies the past three quarters of sales growth, pretax and after-tax profit margins and return on equity.
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Tilray Stock Technical Analysis
TLRY stock began trading in July 2018 on the Nasdaq via an IPO. That IPO was the first on a big U.S. exchange from a pure-play cannabis company.
This year, shares soared as much as 711%, hitting 67 on Feb. 10. The stock has fallen steadily since, and is below its 50-day line. Shares are not in a buy zone, and no new base pattern has formed.
Is Tilray Stock A Buy?
Shares of Tilray are not in a base or in buy range. So TLRY stock is not a buy right now.
IBD advises investors to focus on stocks with stronger fundamentals that are moving into buy zones.
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