Aurora Stock Forecast Looks Bullish Post Q4 Earnings

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Aurora Cannabis Earnings Report

Few companies have performed as spectacularly as Aurora Cannabis Inc (OTCMKTS:ACBFF, TSE:ACB) in recent weeks. While the Aurora Cannabis stock chart may not reflect it just yet, the stock has made several significant moves that have positioned it to be a powerhouse moving forward.

The Aurora Cannabis earnings report was the cherry on top, surprising analysts and leading to strong gains for ACBFF stock.

We’ll start with the Aurora 2018 annual report.

The company posted a surprisingly positive fourth quarter with a profit compared to last year’s loss. (Source: “Aurora Cannabis Inc. Announces Results for the Fourth Quarter and 2018 Fiscal Year,” Cision, September 24, 2018.)

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Revenue shot up 223% compared to the same quarter last year, hitting $19.1 million.

The gross margin on medical cannabis also jumped quite high, hitting 74%, versus 58% during the same period last year. The increase came about due to a higher average selling price per gram of dried cannabis, alongside a higher proportion of cannabis oil sales.

Coupled with the higher profit margins was a decrease in cash cost of sales and cash cost to produce, dropping by 11% compared to last year.

These metrics are especially important, as they are some of the key factors that differentiate the myriad marijuana stocks. While many pot companies have signed supply agreements and the like, being able to keep production costs down and drive up profit margins on sales is going to be vital to a healthy and prolonged success.

Aurora Cannabis stock was also the beneficiary of an increase in the company’s active registered patients by 164% compared to last year.

Aurora’s kilograms produced and sold also jumped 90% and 114%, respectively.

Dollar figures are in thousands unless otherwise noted.

Fiscal-Year 2018

Fiscal-Year 2017

Percentage Change

Financial Results

Revenue

$55,196

$18,067

206%

Gross margin on medical cannabis before fair value adjustments

65%

56%

16%

Earnings

$69,227

-$12,968

Not Meaningful 

Earnings attributable to common shares

$71,936

-$12,968

Not Meaningful

Operational Results

Average net selling price per gram of dried cannabis

$7.65

$6.47

18%

Average net selling price of cannabis oil

$13.68

$17.91

-24%

Kilograms produced

5,632

3,037

85%

Kilograms sold

5,022

2,382

111%

(Source: Ibid.)

Not only was the Aurora Cannabis stock Q4 fiscal 2018 report positive quarter-over-quarter, it was also positive year-over-year.

As you can see from the table above, Aurora saw impressive jumps across the board, in everything from revenue to average per gram price.

Aurora’s revenue has spiked by over 200% from last year, speaking to the growth in both the company and the marijuana industry as a whole.

And it’s worth noting that this is all without Canadian marijuana legalization, which will land before the next quarterly report is released. So expect to see some of these already-impressive numbers balloon.

Aurora Acquisitions

While the hard numbers are impressive, Aurora Cannabis stock has been making moves elsewhere that have strengthened its position in the market.

In 2018 especially, the Aurora acquisitions have been plentiful and recurring.

The company most recently acquired UAB Agropro, Europe’s largest producer, processor, and supplier of organic hemp and hemp products.

The Agropro acquisition provides Aurora with access to 1,600 hectares of land to grow a potential 1,000,000 kilograms of hemp. Agropro is also looking to expand into Lithuania, Latvia, Estonia, and Poland—potentially adding another 3,000 hectares. (Source: “Aurora Cannabis Acquires Europe’s Largest Organic Hemp Company,” Cision, September 12, 2018.)

The deal will allow Agropro to exploit the cannabidiol (CBD) components of its hemp.

Aurora is planning to use the formerly discarded hemp biomass containing CBD to create a number of wellness products.

Aurora had already cemented its global marijuana strategy with its ICC Labs Inc (OTCMKTS:ICCLF, CVE:ICC) acquisition, enabling Aurora to enter the South American market. Gaining entry into the European market via Agropro further served that end.

And many of its previous acquisitions—most notably MedReleaf Corp—helped expand the Aurora’s marijuana supply capacity. This means it will have all the cannabis products it needs to fulfill supply agreements and serve its thousands of patients.

Furthermore, the company is looking to register on a major U.S. stock exchange in October, likely spurring a growth in share price as American investors flood the company with capital—much like they did with Canopy Growth Corp (NYSE:CGC) and Cronos Group Inc (NASDAQ:CRON) earlier in the year.

Aside from those concrete gains, rumors have been swirling that a big partnership may be on the way for Aurora, following a report that The Coca-Cola Co (NYSE:KO) was in talks with Aurora to produce non-alcoholic, cannabis-infused beverages. (Source: “Coke, Aurora Cannabis in talks to make marijuana-infused drinks: BNN Bloomberg,” CNBC, September 17, 2018.)

If that deal lands, expect to see Aurora Cannabis shares skyrocket.

Analyst Take

There’s a lot to be excited about in Aurora Cannabis stock.

The company’s most recent quarterly report impressed analysts and investors alike, leading to a strong boost in its share price. Considering that the company is poised to factor into the Canadian legal marijuana market in a big way, this is a great primer for that surge.

On top of the strong financials, Aurora’s acquisitions will begin paying off sooner rather than later as global markets open up and the company can put its increased marijuana supply capacity to good use in Canada.

Overall, this is the best that ACBFF stock has looked all year, and I project the company to have a strong finish to 2018.