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Aurora Cannabis (ACB) to Report Q3 Earnings: What's in Store?

Zacks Equity Research

Aurora Cannabis Inc.’s ACB third-quarter fiscal 2019 earnings are scheduled to release on May 15, before market opens. A strong Canadian consumer market and acquisitions are expected to drive third-quarter results. However, stiff competition persists.

Which Way Are Estimates Headed?

For the quarter to be reported, the Zacks Consensus Estimate for Aurora Cannabis’ bottom line stands at a loss of 3 cents per share. The same for revenues is pinned at $55.1 million, suggesting a substantial year-over-year upside of 332.7%.

Let’s see how things are shaping up prior to the release.

Aurora Cannabis Inc. Price and EPS Surprise

 

Aurora Cannabis Inc. Price and EPS Surprise | Aurora Cannabis Inc. Quote

Factors to Consider

As the cannabis industry continues to evolve, Aurora Cannabis has been implementing advanced technologies and creating demand for cannabis products in Canada and abroad, which are expected to drive the to-be-reported-quarter results.

Notably, the Canadian consumer market represents a solid opportunity for the company. Continued high demand from the Canadian market is likely to be a key driver of revenues. Considering these, management projects an increase in sales for the fiscal third quarter.

Meanwhile, the company’s Aurora Vie facility in Quebec received sales license from Health Canada for soft gel production. This production will be aided by Aurora Cannabis’ extraction partner, Radient Technologies, which operates its high throughput cannabis oil extraction process commercially.

That’s not all. The company has significantly expanded its overseas foothold across 22 countries. This is expected to ramp up fiscal third-quarter international revenues as well.

In recent times, Aurora Cannabis became the first private company in Europe to be granted an import permit for medical cannabis into Poland. The company also started shipping in Deutschland and Czech Republic, where cannabis products see growing market demand.

Also, Aurora Cannabis became the first medical cannabis producer to be selected by the Luxembourg Health Ministry to supply medical cannabis flower making it the seventh European Union member country.

Aurora Cannabis is also focusing on inorganic expansion through acquisitions, which are expected to prove accretive to results in the quarter to be reported.

Last December, Aurora Cannabis acquired Farmacias Magistrales, a Mexican pharmaceutical manufacturer and distributor. The buyout of South America’s ICC Labs also deserves a mention in this regard.

Earlier this year, Aurora Cannabis completed the Whistler buyout which is expected to lend the company a premium-priced and differentiated organic certified product suite to expand its medical and consumer offerings in Canada and internationally.

Despite these positives, stiff competition in the medical marijuana space is a headwind. Notably, Aurora Cannabis competes with the likes of Aphria and Canopy Growth, whose cannabis products see robust demand in the Canadian market.

What Does Our Model Say?

Per our proven model, a stock needs to have a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) to deliver a positive earnings surprise in the quarter. However, this is not the case here.

Earnings ESP: Aurora Cannabis has an Earnings ESP of +55.88%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Aurora Cannabis carries a Zacks Rank #4 (Sell).

Please note that we caution against stocks with a Zacks Rank #4 or 5 (Strong Sell) going into the earnings announcement, especially when the company is seeing negative estimate revision.

Stocks Worth a Look

Here are a few stocks that are likely to post a beat this earnings season.

HEXO Corp. HEXO has an Earnings ESP of +27.08% and a Zacks Rank #3.

Ollie’s Bargain Outlet OLLI has an Earnings ESP of +1.61% and a Zacks Rank #3.

lululemon athletica LULU has an Earnings ESP of +0.51% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

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