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Earnings

Could Aurora Cannabis’ share price go up in smoke after earnings?

For Aurora Cannabis’ [ACB] share price, 2020 has gone from bad to worse.

While Aurora Cannabis’ share price hit an intraday high of $27.84 on 16 January, it closed the day at $25.80, marking a 4.4% fall from its opening price at the start of the year.

This year’s high is a far cry from its best-ever day on the markets, when Aurora Cannabis’ share price hit an all-time high of $144.48 before closing at $143.27 on 23 January 2018.

Aurora Cannabis’ share price has been on a downward trajectory since March 2019. On its worst day of trading so far this year, Aurora Cannabis’ share price fell to an intraday low of $5.60 on 13 May before closing at $5.80 — its lowest value in four years. The decline marked a year-to-date fall of 75.9%.

However, Aurora Cannabis’ share price was quick to recover in the following days and reached a post-slump peak of $19.68 during intraday trading on 18 May, before closing at $17.10. Despite the surge, this value still marked a loss of 34% year-to-date.

Since then, Aurora Cannabis’ share price has declined by 74.8% through 18 September’s close.

Will the company’s earnings report, due on 22 September, see Aurora Cannabis’ share price continue to fall?

 

 

How has Aurora Cannabis been performing?

When Aurora Cannabis released its third-quarter earnings on 15 May, it reported a loss of $1.37 per share, representing a difference of 37% compared to last year’s $1.89 loss per share.

It missed the Zacks consensus estimate of a loss of $0.53. Over the past four consecutive quarters, Aurora has only surpassed EPS estimates twice.

For the quarter ended in March, Aurora Cannabis posted revenue of CA$75.5m, which surpassed the Zacks consensus estimate of $46.9m. On the day of its earnings report, Aurora Cannabis’ share price jumped up 68.6% to close at $11.20.

The results showed no material disruptions caused by the coronavirus pandemic. Michael Singer, interim CEO, expects the impact of COVID-19 to have a greater effect on the fourth quarter.

Looking ahead to its upcoming earnings release, analysts have a more positive outlook for Aurora Cannabis’ earnings, with the bottom line pegged at a loss of $0.27 per share, according to Zacks Equity Research. However, revenue is expected to reach $54.6m, which would represent a decline of 36% from the year-ago reported figure.

For the full year, Aurora Cannabis is expected to make sales of $207.21m, while total losses per share for the fiscal year 2020 are forecast to reach $11.55.

$207.21million

Aurora Cannabis' forecasted full-year sales

  

What’s the outlook?

“Aurora Cannabis continues to dilute its shareholders into oblivion by selling stock to raise cash, and slightly over half of its total assets are classified as goodwill — that is, it overpaid for all of its acquisitions. I'm not entirely sure what Robinhood investors see in this stock,” Sean Williams wrote in TheMotley Fool.

“Aurora Cannabis continues to dilute its shareholders into oblivion by selling stock to raise cash, and slightly over half of its total assets are classified as goodwill — that is, it overpaid for all of its acquisitions. I'm not entirely sure what Robinhood investors see in this stock” - Sean Williams

 

Aurora Cannabis has a consensus Hold rating from Zacks Equity Research.

Among 19 analysts polled by CNN Money, the consensus rating is also to Hold the stock. This rating is held by a majority of 13 analysts, with the remaining six evenly split between giving the stock Buy and Sell ratings.

The median 12-month price target among 17 analysts polled by CNN Money is $11.37, with a high estimate of $18 and a low of $5.29. The median estimate represents a 74.1% increase from Aurora Cannabis’ share price of $6.53 as of 18 September’s close.

 

Market Cap$739.396m
PE ratio (TTM)28.89
EPS (TTM)0.22
Quarterly Revenue Growth (YoY)15.9%

Aurora Cannabis share price vitals, Yahoo Finance, 21 September 2020

Disclaimer Past performance is not a reliable indicator of future results.

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The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although we are not specifically prevented from dealing before providing this material, we do not seek to take advantage of the material prior to its dissemination.

CMC Markets does not endorse or offer opinion on the trading strategies used by the author. Their trading strategies do not guarantee any return and CMC Markets shall not be held responsible for any loss that you may incur, either directly or indirectly, arising from any investment based on any information contained herein.

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