Like sports fans who are backing the team lagging behind on the scoreboard, investors in the cannabis sector vigilantly watch for that coveted turn-around moment for companies, the breakout that will shift the game and change the outcome for the better.
In some ways, earnings season is watched in the same manner. Unexpected writedowns, which put the elusive profitability threshold out of reach, dash expectations surrounding some growers and the market reacts within hours, driving stock prices down. Alternatively, an unforeseen boost in cannabis sales edging revenues higher is viewed as a pivotal milestone and that company’s stock heads upward.
The key question for investors: which companies will come out on top?
One cannabis name consistently posting winning numbers is Trulieve Cannabis (OTC:TCNNF), (CSE:TRUL), a Florida-based medical marijuana company. On Aug. 12, Trulieve printed impressive results again and the market reaction was swift, pushing the stock to an all-time high of US$26.25.
The integrated “seed-to-sale” cannabis firm unveiled better-than-expected second quarter results, posting revenues of US$120.8 million, a record for the company and a 26% rise from the previous quarter and a 109% increase from the same quarter last year.
The adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) came in at US$60.5 million, Trulieve's 10th consecutive quarter posting profits. These consistently positive results make the company somewhat of an outlier in the industry.
And in telegraphing the message that this was not just a short-lived upswing, the company adjusted its fiscal outlook for the rest of the fiscal year, upping its EBITDA to between US$205 million and US$225 million. The previous guidance had put adjusted EBITDA between US$140 million and US$160 million.
In a statement, Trulieve CEO Kim Rivers said:
"Once again our financial results reflect our exceptional ability to grow our business quarter over quarter, through continued organic expansion of our retail footprint, while maintaining industry leading profitability. We are pleased to be able to demonstrate strong financial performance in revenue, adjusted EBITDA and free cash flow while pivoting our business to meet the changing behaviors and needs due to COVID."
"Looking ahead, we are excited about the second half of the year and will continue focusing on execution and expansion."
First, analysts chimed in, describing the revenue expectations as conservative. Then, the market had its say.
Shares of Trulieve added more than 15%, hitting the all-time high of US$26.25. The stock has since retraced some of those gains, closing yesterday at US$23.64. Over the course of the last year, Trulieve has soared just over 157%, an impressive mark in an industry that has seen market caps whittled away over the same time period.
Like sports fans, investors in the cannabis sector are looking for a winner. Trulieve is proving it's a skilled performer.
Music to your ears Ranger! - Bigger Isn’t Always Better For Cannabis Companies Trying to Survive Pandemic
Tiffany Kary August 20 2020, 4:30 PM August 20 2020, 7:35 PM
(Bloomberg) -- Cannabis companies are learning that to survive the pandemic, bigger isn’t necessarily better. Specialized operations and a narrow geographic footprint are buoying marijuana providers such as Trulieve Cannabis Corp. at a time when the broader industry is struggling with falling demand and capital constraints. That’s a shift from a few years ago, when exuberance in the market pushed
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