uploads///Forward EV to Sales

Does Aurora Cannabis Look Attractive after Its Earnings?


May. 16 2019, Published 8:04 a.m. ET

Is Aurora Cannabis attractive?

Aurora Cannabis (ACB) is one of the top marijuana stocks for investors. The company posted its third-quarter earnings on May 14. The company delivered sequential net revenue growth of 20% to $65 million from $54 million in the previous quarter. Aurora Cannabis delivered net revenue growth of 305% YoY (year-over-year) from $16.1 million. The stock has moved sideways since its third-quarter earnings. Aurora Cannabis closed at 11.7 Canadian dollars on May 14. The ETFMG Alternative Harvest ETF (MJ) closed 1.7% higher at $$33.9. Let’s see if the stock appears attractive based on its valuation.

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Forward multiple

Aurora Cannabis was trading at a forward EV-to-sales multiple of 14.2x, which was lower compared to its valuation multiple of 14.7x before the earnings. The stock continued to trade at a significant premium to its peer median multiple of 6.4x on May 15. The stock was also trading above its historical average multiple of 10.4x.

Canopy Growth (WEED) was trading at a forward multiple of 22.0x, while Cronos Group (CRON) was trading at a forward multiple of 25.3x. Tilray (TLRY) was trading at a relatively lower multiple of 13.0x. Aphria (APHA) was trading at a multiple of 3.1x. Compared to the above stocks, Aphria experienced negative sentiment after its earnings. Aphria recorded a write-off related to its acquisition in Latin America.


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