2 Cannabis Stocks That Popped on Recent Quarterly Earnings Beats

Innovative Industrial Properties (IIPR) and Tilray (TLRY) are two cannabis stocks that recently reported stellar quarterly results. Does the recent uptick in stock prices provide a good entry point for investors? Let’s see what drove revenue and earnings for the two companies in the last quarter.

The cannabis industry will continue to attract investors as it is a sector poised for massive growth in the upcoming decade. In the not too distant future, the U.S. is likely to decriminalize or even legalize marijuana for recreational use which will provide cannabis producers access to the largest market in the world, making them quality long-term bets.

The recent quarterly results have shown that pot companies are focused on improving their bottom-line while targeting robust growth in sales. These strategies have enabled some companies to report enviable results in Q2, driving share prices higher.

Here, we take a look at Innovative Industrial Properties (IIPR) and Tilray (TLRY).  Both stocks have seen an uptick in stock prices post their quarterly results.

IIPR stock has crushed the broader market since IPO

One of the best performing cannabis stocks in the last few years has been Innovative Industrial Properties (IIPR). This company is not a cannabis producer but operates as a marijuana-focused real estate investment trust.

IIPR acquires, owns, and manages properties that are leased out to licensed producers via triple-net-lease agreements. This stock has more than doubled in the last year and has returned over 1,000% to investors since its IPO in late 2016. It has also gained 25% year to date and risen close to 12% in the last month on the back of stellar Q2 results.

In the second quarter of 2021, IIPR reported sales of $48.9 million which were 101% higher compared to revenue of $24.3 million in the year-ago period. Its operating income soared 132% to $32.9 million while net income was up 124% to $29 million year over year in the June quarter.

IIPR reported adjusted earnings per share of $1.17 which indicated a rise of 60% compared to Q2 of 2020. Further, its adjusted funds from operations also doubled to $43 million in Q2. Wall Street forecast IIPR to report revenue of $45.9 million and earnings per share of $1.11 in the second quarter of 2021.

The REIT ended Q2 with a cash balance of $156.3 million as well as $650 million in short-term investments. Its debt stands at $2.1 billion and accounts for 21% of gross assets.

Tilray stock is up 12% since quarterly results

On July 28th Tilray announced its fiscal fourth quarter of 2021 results ended in May and reported net revenue of $142.2 million, an increase of 25% year over year. Its adjusted EBITDA rose 285% to $12.3 million while free cash flow also doubled to $3.3 million in Q4. However, the most surprising factor of its results was Tilray’s net income of $33.6 million or $0.18 per share in the quarter. In the year-ago period, it reported a net loss of $84.3 million or $0.39 per share.

This significant increase in its profitability pushed Tilray’s stock higher, shortly after its quarterly results. But investors should note that the cannabis giant was forecast to report sales of $199 million in Q4 according to Wall Street forecasts. Further, its operating loss stood at $73.7 million in the quarter which meant net profit was driven by a non-operating income of $121.5 million.

Tilray’s non-operating income was attributed to an unrealized gain on convertible debentures which was driven by the change in its stock price as well as the change in the trading price of these debentures. In fiscal Q4, Tilray stock was down 37% which provided the company with the above-mentioned non-operating income.

IIPR shares were trading at $229.15 per share on Wednesday afternoon, up $1.16 (+0.51%). Year-to-date, IIPR has gained 26.99%, versus a 19.42% rise in the benchmark S&P 500 index during the same period.

About the Author: Aditya Raghunath

Aditya Raghunath is a financial journalist who writes about business, public equities, and personal finance. His work has been published on several digital platforms in the U.S. and Canada, including The Motley Fool, Finscreener, and Market Realist.


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