Trulieve Proving To Be Cannabis Sector Winner With Growing Fan Base
Investing.com | Aug 18, 2020 11:14
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."
Get The App
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.
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.