Is a Disappointment in Store for Tilray’s (TLRY) Q3 Earnings?


Tilray, Inc

.

TLRY

is scheduled to report third-quarter 2020 results on Nov 9, after market close.

In the last reported quarter, the company beat earnings expectations by 3.70%. However, the company has a disappointing track record. Tilray missed earnings estimates in three of the last four quarters, the average negative surprise being 40.61%.

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


Factors at Play

Tilray is a global pioneer in the research, cultivation, production and distribution of cannabis and cannabinoids.

Revenues increased 10% year over year in the last reported quarter, driven by growth in cannabis sales, improvement in International Medical and contribution from Manitoba Harvest hemp products sales. However, revenues were down sequentially due to declines in Adult Use and Canada Medical as a result of the COVID-19 impact, pantry-loading in March, the temporary closure of stores in Ontario, changes in purchasing behavior by the provinces, the shift to curbside pickup or delivery, and the limited number of retail locations added during the second quarter of 2020. Hence, similar trends have most likely prevailed in the to-be-reported quarter.

Notably, Tilray acquired Manitoba Harvest — a hemp and natural foods producer in Winnipeg, Manitoba — in 2019. The acquisition might have spurred demand year over year for the company’s products in the third quarter.

Gross margin declined in the previous quarter due to introductory shipments made at lower margins in International Medical and a one-time bulk transaction associated with the termination of a supply contract. Nevertheless, the company has undertaken significant steps to drive efficiencies across the business and the positive impact of these actions might be reflected in the upcoming quarterly results.

On the last call, management stated that growth in International Medical revenues will outpace other segments in the coming quarters. However, investors will be keen to know the magnitude of the adverse impact of the coronavirus outbreak on the company’s business as the pandemic gains steam again.Moreover, the company ended the second quarter of 2020 with $137.2 million in cash and cash equivalents. Investors will focus on the company’s plans to manage operations with the available cash resources.


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 4 (Sell).


Share Price Performance

Tilray’s stock has depreciated 61.1% in the year so far compared with the

industry

’s decline of 11.4%.

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 season.


Geron

GERN

has an Earnings ESP of +6.25% and a Zacks Rank #2. You can see

the complete list of today’s Zacks #1 Rank stocks here


.


Regenxbio, Inc

.

RGNX

has an Earnings ESP of +4.76% and a Zacks Rank #3.


Mylan

MYL

has an Earnings ESP of +1.69% and a Zacks Rank #3.

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