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What's in Store for Aurora Cannabis (ACB) in Q4 Earnings?

Zacks Equity Research

Aurora Cannabis Inc. ACB is scheduled to report fourth-quarter fiscal 2019 results on Sep 12, before the opening bell. Encouraging prospects in the Canadian consumer market and upbeat preliminary results are indicative of a solid fourth quarter. However, competition is stiff.

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 2 cents. The same for revenues is pinned at $79 million, suggesting a substantial year-over-year rise of 432.5%.

Aurora Cannabis Inc. Price and EPS Surprise

 

Aurora Cannabis Inc. Price and EPS Surprise

Aurora Cannabis Inc. price-eps-surprise | Aurora Cannabis Inc. Quote

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

Factors to Consider

Aurora Cannabis released upbeat preliminary results recently.

For the quarter to be reported, the company expects revenues within $100-$107 million, suggesting a significant uptick from the year-ago quarter’s $19.1 million. For fiscal 2019, the company expects revenues within $249-$256 million.

Net cannabis revenues are expected between $90 million and $95 million, with growth anticipated across all key business segments, in both Canadian and international, and consumer markets.

Additionally, Aurora Cannabis is likely to have witnessed net revenue growth in the soon-to-be-reported quarter on sustained growth through continued execution of consumer and medical strategies.

Introduction of derivative products in international markets and launch of higher value-added derivative product lines are likely to contribute to revenue growth and margin expansion in the to-be-reported quarter. Increased production has been a leading and consistent driver of the company’s top line. Notably, significant improvement in retail infrastructure across Canada is expected to show on results.

Management is also optimistic about the launch of brick-and-mortar stores in Ontario which is expected to have contributed significantly in the quarter.

Despite these positives, competition is stiff in the medical marijuana space. Notably, Aurora Cannabis competes with the likes of Aphria and Canopy Growth CGC, 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. This is however, not the case here.

Earnings ESP: Aurora Cannabis has an Earnings ESP of +34.38%. 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.

Peer Releases

Here are two stocks that reported solid results this earnings season.

CONMED Corporation CNMD delivered second-quarter 2019 adjusted earnings per share of 56 cents, which beat the Zacks Consensus Estimate of 53 cents by 5.7%. Revenues of $238.3 million surpassed the Zacks Consensus Estimate by 2.2%. The company carries a Zacks Rank of 2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Baxter International Inc. BAX delivered third-quarter 2019 adjusted earnings of 89 cents per share, which surpassed the Zacks Consensus Estimate of 81 cents by 9.9%. Revenues of $2.84 billion outpaced the Zacks Consensus Estimate of $2.79 billion by 1.9%. The company carries a Zacks Rank #2.

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Baxter International Inc. (BAX) : Free Stock Analysis Report
 
CONMED Corporation (CNMD) : Free Stock Analysis Report
 
Aurora Cannabis Inc. (ACB) : Free Stock Analysis Report
 
Canopy Growth Corporation (CGC) : Free Stock Analysis Report
 
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