Why Tilray Brands Stock Glows Green Today

Tilray Brands (NASDAQ: TLRY) stock exploded higher after reporting a surprise profit in its fiscal Q1 earnings report Thursday.

Heading into the report, analysts forecast Tilray would lose $0.04 per share on $205.8 million in quarterly revenue. Instead, Tilray broke even on earnings with a $0.00 profit, while its revenue beat expectations at $209.5 million.

Tilray stock is up a strong 16.6% at 9:45 a.m. ET.

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Tilray Q1 earnings

Not all of Tilray's news was great. Revenue growth was a modest 5% year over year, and gross profit margin declined three full percentage points to 27%. But Tilray management says it focused on "operational efficiencies and ... profitability," and that focus bore fruit in the form of a tiny $1.5 million net profit.

Per share, that rounded down to $0.00 per share -- but it was still a profit, and still a pleasant surprise.

Further good news appeared on the company's cash flow statement, which showed $10.9 million in negative free cash flow. That sounds bad, but a year ago, Tilray was still burning cash at the rate of $42 million per quarter -- so less than $11 million is a big improvement.

Is Tilray stock a buy?

Tilray has made marked improvement in its business, and looks to be on a good path right now. Investors are right to be happy today. That said, this is still a $2.4 billion marijuana stock that lost $2.2 billion over the last 12 months.

The question now is whether Tilray can maintain its momentum gained in Q1. Wall Street analysts don't think the company can be consistently profitable before 2028 at the earliest, but if Tilray can surprise them on that, like it surprised them today -- this stock could be a winner.

Rich Smith has no position in any of the stocks mentioned. The Motley Fool recommends Tilray Brands. The Motley Fool has a disclosure policy.