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Aurora Cannabis: What to Expect from Its Earnings

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May. 2 2019, Published 9:40 a.m. ET

Aurora Cannabis

Aurora Cannabis (ACB) is expected to announce its earnings on May 6 before the market opens. The company’s earnings will reflect the second full quarter since recreational cannabis became available in Canada. The results are highly anticipated by market participants.

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Revenue estimates

If we look at analysts’ estimates for the quarter in the above chart, the revenues are expected to grow in excess of 363% to 74.7 million Canadian dollars in the third quarter from 16.1 million Canadian dollars in the third quarter 2018. Sequentially, the revenues are estimated to grow 37% from 54.2 million Canadian dollars in the second quarter.

Margins

One of the challenges for Canadian companies like Canopy Growth (WEED), Tilray (TLRY), and Aphria (APHA) is to lower the cost through scale so they can compete with the cannabis market in the illicit market. However, lowering the cost has been a challenge for these companies (MJ).

If we look at the gross profitability, analysts expect the gross income to increase 540% year-over-year to 48.9 million Canadian dollars. The increase would expand the gross margins to 61.5% from 47% in the third quarter of 2018. Sequentially, when the margins were 52.4%, there were expectations of an improvement by ~9%. Intense competition in the recreational and illicit market has put downward pressure on the margins.

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