TLDR
- Tilray Brands reported unexpected Q1 profit of $1.5 million after analysts predicted a $0.04 per share loss
- Stock surged 22.1% as revenue hit $209.5 million, beating the $205.8 million estimate
- Free cash flow improved to negative $10.9 million from negative $42 million year-over-year
- CEO Irwin Simon purchased 165,000 shares at $0.61, demonstrating management confidence
- Wall Street maintains “Hold” rating with $1.94 average price target despite earnings beat
Tilray Brands delivered something rare in the cannabis sector Thursday. An actual profit.
The company posted $1.5 million in net earnings for fiscal Q1. That translated to $0.00 per share, but it beat analyst expectations calling for a $0.04 loss.
Shares rocketed 22.1% higher on the news. The stock reached $2.32 during trading before settling at $2.10.
Revenue came in at $209.5 million. That topped Wall Street’s $205.8 million forecast and represented 5% year-over-year growth.
Trading volume exploded to 298 million shares. That’s 516% above the typical 48 million daily average.
Management Strategy Pays Off
Tilray’s turnaround story centers on operational efficiency. Management has been laser-focused on cutting costs and improving profitability.
The results speak for themselves. Free cash flow reached negative $10.9 million for the quarter.
That’s still burning cash, sure. But it’s a massive improvement from the $42 million quarterly burn rate a year ago.
Gross profit margin did slip three percentage points to 27%. But the company prioritized bottom-line results over maintaining margins.
Insider Buying Signals Confidence
CEO Irwin Simon made headlines back in July with a personal stock purchase. He scooped up 165,000 shares at $0.61 each.
The transaction cost him $100,650. It boosted his direct holdings to 3.9 million shares worth $2.4 million.
That kind of insider buying often signals management’s belief in future performance. Simon’s timing looks pretty good now.
The company carries a $2.31 billion market cap. Its debt-to-equity ratio sits at a manageable 0.20.
Current ratio stands at 2.46 with a quick ratio of 1.49. These metrics suggest decent short-term financial health.
Wall Street Stays Cautious
Analyst sentiment remains mixed despite the earnings beat. The consensus rating holds at “Hold” with a $1.94 price target.
Jefferies Financial Group raised their target from $1.50 to $2.00 in August. They rate the stock a “buy.”
But others remain skeptical. Wall Street Zen downgraded shares to “strong sell” in July.
Two analysts rate it a buy. Four have hold ratings and one recommends selling.
Forecasts suggest the company won’t achieve consistent profitability until 2028. Analysts expect negative $0.20 earnings per share for the full year.
The stock’s beta of 1.98 indicates higher volatility than the market. The 50-day moving average is $1.22 while the 200-day sits at $0.75.
Institutional ownership remains light at just 9.35%. Several hedge funds increased positions during Q1, though stakes remain small.
The company lost $2.2 billion over the trailing 12 months. But this quarter proves the gap is narrowing faster than expected.
