Tilray TLRY stock printed impressive numbers for the final quarter of 2021. Or, did they? There was a surprise earnings increase to some $33M but, this was outside of normal operations; Tilray printed negative operating profits in a big way. But, one thing that Tilrayd did was provide insight into their future expectations for revenue: In FY 2024 Tilray TLRY stock is targeting $4B in revenue. That is big and this puts Tilray as a mover in the Complete list of Top 100 Cannabis Companies.
So, I am going to break down the latest financial data and I’m also going to look at the possibility of what would happen with TLRY stock should Tilray achieve its goals of $4B in revenue for FY 2024. I have been hyper-critical of Tilray since day one not because of anything more than the fact that Tilray TLRY stock has been sucked up into the hype that is cannabis investing. But, moving beyond where they are to where they could be you have to wonder if TLRY stock could become one of the Best Marijuana Stocks to Buy?
Tilray Financial Numbers Comparisons
Tilray’s current numbers in the Complete List of Top 100 Cannabis Stocks is modest for now. Here is how Tilray stacks up against the other 100 stocks:
- #49 Revenue Growth Rate: 5%
- #10 Revenue Per Share: $0.317
- #70 Gross Margins: 16.7%
- #38 Operating Efficiencies: 67.5%
- #25 EBITDA/Revenue: 8.6%
- #23 Debt/Asset Ratio: 25.9%
There are a few areas where Tilray stock numbers are solid but, some, such as gross margins and operating efficiencies have room to go. But, should Tilray hit the $4B number that will go extremely far to getting to the next level with these metrics. In fact, at that volume, $1B per quarter on average, margins will be ultra-competitve.
If Tilray Stock were to be hitting a modest net earnings percentage this would put TLRY at about $50.00 – $100.00 per share; an extraordinary increase from its current level of $15.50.
My Tilray TLRY Stock Forecast
Tilray TLRY Stock Financials
Like I mentioned, the numbers were decent, but not solid. The real gains will be over the next eight quarters as Tilray ramps up to the $4B level for the FY 2024 year. Keep in mind that the revenue run rate starts in 8 quarters.
Revenues
Revenues are misleading simply because of the merger. The $142M was a combination of the two companies, Tilray and Aphria, and on a pro forma basis, this represents a modest increase:
I am not entirely certain how this plays out as Tilray ramps up over the next three years for sales to get to $4B, but, a measured increase QoQ will be necessary. Currently, given just the four quarters at the current rate, you are looking for an approximate $600M -$700M in the coming year.
Gross Margins
Gross margins are a bit of a sore spot for me simply because they are so low:
However, given the large increase in what is coming in all of the business divisions. As Tilray continues to ramp up these numbers will continuously increase over the course of the next eight quarters and likely hit moderate levels at the very least.
I am looking for Tilray stock to achieve 55% gross margins over the course of the next eight quarters.
Operating Efficiencies
One thing that is likely to improve will be operating efficiencies because of the merger and are on the right trajectory:
This is a mathematical calculation derived from total operating costs over total revenues; it is a percentage. As revenues increase and if Tilray stock maintains a steady level on operating costs, this metric will continually move lower and lower showing that Tilray is producing product at a low cost from the perspective of operating costs.
EBITDA & Net Income
Outside of normal operations, Tilray was EBTIDA profitable:
Again, I stress that Tilray is now beginning a 24-month run rate to achieve an average of $1B in revenue per quarter. Along the way, they are going to have to achieve EBITDA profitability. The sooner that Tilray stock becomes consistently profitable the better. Then, with ramped up operations and growing of product, this will translate into continuous profits for the company.
Tilray TLRY Stock
I have never been kind on Tilray stock; it first came out in 2018 above $300.00 per share. Now, after the merger, it is poised to drive upwards to $50.00 – $100.00 per share. For now, TRLY stock is sitting at $15.50:
I am looking at the long-term to determine where the stock will go. With a moderate percentage of net income, TRLY stock could easily drive towards $25.00 over the course of the next several quarters but, then there will be further to go as TLRY stock continues higher.
Is Tilray TLRY Stock a good buy?
To ask this question is to project forward what will happen with Tilray’s gross margins and operating costs relative to revenues relative to the future projections of $4B in revenue.
Tilray expects to have $4B in revenue for 2024. Therefore, given today’s announcement, there are four quarters to go for that revenue run rate. In that period of time, over the course of this year, Tilray needs to vastly improve its gross margins. This is going to be no small task given how poor the numbers are now.
There are some 400M shares outstanding for TLRY. Given a very modest 5% net income this would put the EPS at $0.50 per share. So, at a multiple of 50x – 100x, this puts the stock at between $25.00 – $50.00. And, I would expect this to occur over the next four quarters.
But, as time moves on and we get more information and more precise with our calls. Then I could also see TLRY stock pushing upwards to $50.00 – $100.00. However, this is all going to be driven by the fact that Tilray management may achieve better margin metrics outside of a modest 5% that I am highlighting. As time moves forward, I will be able to update this call more and more.
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