Is Aurora Cannabis (NYSE:ACB) A Good Buy After The Earnings?

The cannabis industry has gone through significant difficulties over the past months, and although many companies struggled during the period, Aurora Cannabis (TSX:ACB) (NYSE:ACB) seemed to struggle more than others. However, the Aurora stock has been on fire ever since the company announced its fiscal third-quarter results on May 14.

Key Analysis

Aurora reduced its expenses and boosted its sales, which is why there is newly found optimism about the stock. Hence, it is important to figure out if it is the right time for investing in the stock.

In the second fiscal quarter, Aurora’s performance was highly disappointing as it incurred a net loss of as much as CA$1.3 billion against revenues of CA$56 million. At the time, the company had said that it expected ‘modest to no growth’ in the third quarter. However, Aurora managed to grow its sales by 35% sequentially and 16% year on year. The losses for the period came in at CA$137.4 million.

That being said, it should be noted that when compared to the fiscal first quarter, the performance is not particularly impressive. Moreover, due to the poor performance in Q2, it was easier for Aurora to dazzle investors in the third quarter.

The performance in the third quarter was mainly due to the consumer cannabis net revenues, which came in at CA$38.6 million. However, net marijuana sales were only CA$31.1 million, which reflected a rise of only 14%. On the other hand, the company managed to generate sales of only CA$4.2 million for cannabis derivative products. It soon becomes clear that Aurora’s sales performance is not as impressive as it might look at the surface level.

Moreover, it burned CA$58.7 million in the quarter, which was higher than the CA$54.7 million it had burned in the prior-year period. Experts believe that although the company did manage to deliver a better performance in Q3, the stock is still not worth investing in at this point in time.

About Travis Garlick 1768 Articles
Been writing about and trading stocks since 2013. Manage a group of micro-cap investors on Facebook with over 15,000 members. Turned $8,500 into 185k the first year I started trading stocks and haven't looked back.