Even if Tilray reports the kind of quarterly sales figures that Wall Street expects on Monday, the marijuana company’s stock will be trading at a whopping 100-times annualized revenue.
Tilray stock (TLRY) has been one of the more volatile cannabis stocks in a volatile sector. Trading at about $72 per share on Friday, the stock’s high multiple of sales is one reason why Jefferies analyst Owen Bennett rates Tilray at Underperform.
The company is set to report December quarter earnings after the market closes on Monday. Bennett and most of the analysts surveyed by FactSet expect Tilray to report $15 million in sales for the period, and a loss of $6 million, or 6 cents per share. With a market capitalization of $6.7 billion, investors are clearly looking far beyond 2018 results—and far beyond 2019 and 2020, for which Bennett forecasts earnings per share of 3 cents and 40 cents, respectively.
The British Columbia-based company has had trouble getting its product on shelves in Canada since the country legalized recreational marijuana sales in October. Unable to produce enough cannabis on its own, Tilray has sought third-party suppliers, but said in its September report that the quality of outside supply was disappointing. So on Monday’s conference call—set for 5 p.m. E.T.—investors will want to hear about Tilray’s supply plans.
Read our recent cover story: You’d Have to Be High to Buy American Marijuana Stocks
Tilray has also announced a number of deals, the prospects of which will be of interest to investors. After the U.S. legalized hemp in December, as part of the 2018 Farm Bill, Tilray agreed to buy Manitoba Harvest, one of North America’s largest producers of hemp food products. Cannabis companies have grand hopes for hemp, which is a strain of cannabis that has none of the buzz-producing chemical THC, but lots of the soothing ingredient known as CBD. So Tilray will surely discuss its CBD ambitions on Monday’s call.
All told, Tilray fans are likely to receive Monday’s news as affirmation of the company’s long-range ambitions. But skeptics will look for substance that might justify the stock’s bubbly valuation.
Tilray Inc. shares were trading at $71.92 per share on Friday afternoon, down $0.37 (-0.51%). Year-to-date, TLRY has gained 1.96%, versus a 12.80% rise in the benchmark S&P 500 index during the same period.
This article is brought to you courtesy of MarketWatch.