How does Auxly's performance this quarter compare to its main competitors in the cannabis CPG space (e.g., Canopy Growth, Aurora, Tilray)?
Fundamental comparison – Auxly’s Q2 2025 package showed a marked turnaround: revenue rose ~28 % YoY to C$78 million, driven by a 45 % jump in its branded‑product segment and a 12 % improvement in gross margin (≈57 % vs 45 % a year earlier). The company cut its adjusted EBITDA loss to C$8.3 million from C$13.6 million and added C$22 million of cash to the balance sheet, taking its liquidity to C$85 million. By contrast, the larger peers remain in a consolidation phase. Canopy Growth’s Q2 2025 revenue slipped 3 % to C$1.12 billion and its adjusted EBITDA loss widened to C$190 million, reflecting ongoing integration costs and weaker U.S. wholesale volumes. Aurora’s top line grew modestly ≈6 % to C$830 million, but its EBITDA remained negative (C$45 million) and cash burn stayed high. Tilray, while posting a 15 % revenue gain to C$1.02 billion, still logged an adjusted EBITDA loss of C$62 million, albeit a narrower gap than the prior quarter. In short, Auxly is the only one turning margin and cash‑flow metrics positive, albeit on a smaller absolute base.
Technical & trading implications – Auxly’s stock (XLY) has rallied ~22 % since the earnings beat, breaking above the 50‑day SMA (~C$5.30) and holding near the rising 200‑day SMA (~C$5.80). The RSI sits at 58, leaving room for upside without being overbought. Volume on the earnings day was 2.4× the 10‑day average, indicating strong buyer conviction. The peers’ shares remain flat to slightly down (Canopy –1.5 %, Aurora –2 %, Tilray –0.8 %) and are still trading below their 200‑day SMA, suggesting a relative weakness in the broader CPG cannabis space.
Actionable insight – With Auxly demonstrating the strongest top‑line growth, margin expansion and a healthier cash runway, the stock appears undervalued relative to its peers (EV/Revenue ≈2.1× vs 3.5‑4.0× for the majors). A long position at current levels is justified for investors seeking a “small‑cap catalyst” within the cannabis CPG niche, targeting a 15‑20 % upside over the next 3‑4 months. Risk management should focus on two factors: (1) the company’s reliance on a limited U.S. distribution network—any wholesale pull‑back could compress margins; and (2) sector‑wide regulatory shocks or a sustained price decline in THC‑rich products, which could pressure all CPG players. Tight stop‑losses just below the 50‑day SMA (≈C$5.30) would protect against a sector‑wide correction while preserving the upside thesis.