Tilray Earnings: Decent Results Support Our View That Recent Share Plunge Was Overdone

Key Morningstar Metrics for Tilray Brands

• Fair Value Estimate: $14.00
• Morningstar Rating: ★★★★
• Morningstar Economic Moat Rating: None
• Morningstar Uncertainty Rating: Very High

What We Thought of Tilray Brands’ Earnings

Tilray Brands’ TLRY fiscal second-quarter 2026 net revenue increased 3% to $218 million. The 3% revenue growth in the cannabis segment and 26% growth in the distribution segment offset a 20% decline in beverage. Adjusted EBITDA margin declined about 20 basis points to 4.1%.

Why it matters: The decline in beverage wasn’t a surprise to us, given portfolio rationalization and ongoing challenges in craft beer. Meanwhile, growth in cannabis came from Canadian adult use and international medical, affirming our view that Tilray remains well-positioned in both markets.

• Impressive growth in distribution portends further international revenue growth. Although the segment generates the lowest margins, it offers a toehold into pharmacies across Germany and other parts of Europe as medical cannabis legalizations and access widen.
• We do not see similar synergies for Tilray’s beverages business for US cannabis. Despite management’s optimism around the rescheduling of cannabis in the United States, we do not see an edge for Tilray, particularly against well-entrenched US multistate operators.

The bottom line: We don’t expect major changes to our $14 per share fair value estimates for no-moat Tilray. We see shares as undervalued, as we think the market underestimates Tilray’s opportunity for further profit growth, particularly from Canadian and international cannabis.

• Before the post-earnings rally, shares had plunged by more than half since Tilray last reported results in early October. Shares were up a high-single-digit percentage after hours, as we think the market recognized that the recent decline was overdone.
• We reiterate our Very High Uncertainty Rating, as cannabis is still a young and volatile industry, suggesting a wide range of potential valuation outcomes. Specifically, the timing of profit growth and regulatory progress is uncertain, with many factors outside of Tilray’s control.