Key Points

• Tilray's earnings have been volatile in the past due to acquisitions and impairment charges.

• Although the company's latest quarterly numbers showed improvement, it continues to struggle with consistent growth and profitability.

• Hopes tied to marijuana legalization in the U.S. are likely to play a bigger role in the stock's future performance, rather than its upcoming earnings report.

• 10 stocks we like better than Tilray Brands ›

Tilray Brands' (NASDAQ:TLRY) stock desperately needs a boost. This year, it has crashed an incredible 54%. The company has expanded via acquisitions in recent years in an effort to be less reliant on cannabis, but that hasn't paid off for investors. Today, its market cap is less than $600 million. The stock has lost 96% of its value in just the past five years.

While there is significant risk with Tilray, the stock is also trading at a significantly beaten-down valuation. With earnings coming up on Oct. 8 for its first quarter of fiscal year 2027, and expectations likely low, could it be a good idea to buy the stock before its latest numbers come out?

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Is Tilray Brands likely to have a strong Q1?

Tilray has been making progress in improving its financials of late. In its most recent quarter, which ended on May 31, its operating loss of $16.5 million was nowhere near the $1.4 billion loss it incurred a year earlier, as it did not have any significant impairment charges during the period, which previously weighed down its earnings.

Investors, however, have reason to remain skeptical. That's because Tilray has historically been volatile. While there are periods where its growth rate appears high, there are others when it comes down significantly. Acquisitions have muddied its results and provided it with temporary boosts. Meanwhile, a lack of consistent profitability remains a significant concern for investors.

I'm not optimistic that Tilray will have a good quarter, certainly not one strong enough to convince growth investors it's become a safer buy. Its core cannabis business grew by just 5% last quarter, and while the beverage business has been growing at a much faster rate, acquisitions have played a role there.

Without significant organic revenue growth, or at least stronger prospects for profitability, I don't think Tilray will be able to convince investors that it has turned things around. And I don't think either one of those scenarios is likely when it reports earnings next month.

Tilray continues to be a highly speculative investment

The biggest rallies in Tilray's stock are normally tied to cannabis legalization hopes in the U.S., rather than strong earnings reports. The company's upcoming earnings report may move the stock, but I think its long-term performance will ultimately depend on the prospects for legalization and broader marijuana industry conditions.

Tilray has been busy with acquisitions in recent years, and they haven't paid off thus far; there's little reason to expect that to change now. Meanwhile, the Canadian cannabis market remains highly competitive with poor margins. Until and unless there's a sizable catalyst, investors are likely better off steering clear of Tilray Brands.

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David Jagielski, CPA has no position in any of the stocks mentioned. The Motley Fool recommends Tilray Brands. The Motley Fool has a disclosure policy.