Buy or Sell Tilray Brands Stock?

Tilray Brands (TLRY) stock has jumped 660% during the past day, and is currently trading at $7.82. We believe there are several things to fear in TLRY stock given its overall Weak operating performance and financial condition. This is aligned with the stock’s Very Low valuation because of which we think it is Fairly Priced.

Below is our assessment:

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Let’s get into details of each of the assessed factors but before that, for quick background: With $8.3 Bil in market cap, Tilray Brands provides research, cultivation, production, marketing, and distribution of medical cannabis products across multiple business segments, including GMP-certified flowers, oils, vapes, edibles, and topicals.

[1] Valuation Looks Very Low

This table highlights how TLRY is valued vs broader market. For more details see: TLRY Valuation Ratios

[2] Growth Is Moderate

• Tilray Brands has seen its top line grow at an average rate of 11.0% over the last 3 years
• Its revenues have grown 2.3% from $812 Mil to $831 Mil in the last 12 months
• Also, its quarterly revenues grew 4.7% to $210 Mil in the most recent quarter from $200 Mil a year ago.

This table highlights how TLRY is growing vs broader market. For more details see: TLRY Revenue Comparison

[3] Profitability Appears Very Weak

• TLRY last 12 month operating income was $-89 Mil representing operating margin of -10.7%
• With cash flow margin of -7.3%, it generated nearly $-61 Mil in operating cash flow over this period
• For the same period, TLRY generated nearly $-2.1 Bil in net income, suggesting net margin of about -258.5%

This table highlights how TLRY profitability vs broader market. For more details see: TLRY Operating Income Comparison

[4] Financial Stability Looks Moderate

• TLRY Debt was $324 Mil at the end of the most recent quarter, while its current Market Cap is $8.3 Bil. This implies Debt-to-Equity Ratio of 176.4%
• TLRY Cash (including cash equivalents) makes up $265 Mil of $2.1 Bil in total Assets. This yields a Cash-to-Assets Ratio of 12.7%

[5] Downturn Resilience Is Very Weak

TLRY has fared much worse than the S&P 500 index during various economic downturns. We assess this based on both (a) how much the stock fell and, (b) how quickly it recovered.

2022 Inflation Shock

• TLRY stock fell 97.6% from a high of $63.91 on 10 February 2021 to $1.52 on 23 June 2023 vs. a peak-to-trough decline of 25.4% for the S&P 500.
• The stock is yet to recover to its pre-Crisis high
• The highest the stock has reached since then is $3.31 on 11 September 2023 , and currently trades at $7.82

 
2020 Covid Pandemic

• TLRY stock fell 88.4% from a high of $21.36 on 15 January 2020 to $2.47 on 18 March 2020 vs. a peak-to-trough decline of 33.9% for the S&P 500.
• However, the stock fully recovered to its pre-Crisis peak by 2 February 2021

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