Should you buy Trulieve ahead of Q2 results?

Ahead of the company’s second quarter results, due August 6, Beacon Securities analyst Russell Stanley says you should be buying Trulieve Cannabis (Trulieve Cannabis Stock Quote, Chart, News, Analysts, Financials CSE:TRUL).

On Tuesday, August 6, TRUL will report its Q2 results in advance of the market open. The analyst broke down his expectations.

“We are looking for revenue/adj EBITDA of $293M/$78M v. current consensus at $293M/$91M. Current revenue forecasts range $287-$298M, while our adj EBITDA estimate is at the low end of the $78-$99M range,” he wrote. “During its Q1 earnings call in May, TRUL predicted revenue would be flat-todown low single digits q/q from $298M in Q1, and our forecast contemplates a 2% q/q decline. We are also looking for $30M in operating cash flow, slightly below the only other FactSet published estimate at $33M. We note that TRUL has beaten street high revenue/adj EBITDA estimates in each of its last two quarterly releases. As discussed in our Q2 Report Card, TRUL was one of few companies to rank top 5 (amongst 27 in our tracking group) across EBITDA and operating cash flow margins

Stanley thinks TRUL will post Adjusted EBITDA of $359.0-million on revenue of $1.16-billion in fiscal 2024. In fiscal 2025, he thinks those numbers will improve to Adjusted EBITDA of $367.0-million on a topline of $1.25-billion.

“TRUL is up 196% since last August 30th, when the HHS recommendation for Rescheduling became publicly known,” Stanley noted. “This is more than 2x the 85% average for the major MSOs and is 3x the return of the next strongest performer at 65%. We attribute at least part of that to the company’s dominance in Florida and optimism for AU legalization there, though we still believe the stock is undervalued. Trulieve now trades at 7.8x our F2025 adj EBITDA forecast, marginally higher than the 7.6x average against the other four major MSOs. Our EV calculation includes the company’s uncertain tax position (UTP) as debt for the time being. We note that our baseline F2025 adjusted EBITDA forecast for TRUL is $367M. We estimate that the legalization of adult-use in Florida could 2-3x that market, with TRUL trading at 3.9-5.2x our pro forma annualized EBITDA estimate of $550-$733M.”