Aurora Cannabis (ACB) To Report Q4 Earnings: What's In Store?

Aurora Cannabis Inc. (TSX:ACB) is scheduled to release fourth-quarter fiscal 2019 results on Sep 12, before the opening bell.

In the last reported quarter, the company witnessed a negative earnings surprise of 166.7%. Further, it has a negative average surprise of 166.7% for the trailing four quarters.

Let's take a look at how things are shaping up prior to this announcement.

Which Way Are Q4 Estimates Treading?

The Zacks Consensus Estimate for fiscal fourth-quarter earnings is pegged at a loss of 2 cents. The same for revenues is pegged at $79 million, indicating growth of 432.5% from the year-ago reported figure.

Factors to Influence Fiscal Q4

Aurora Cannabis is likely to have witnessed cannabis revenue growth across all three market segments in the to-be-reported quarter on the back of increase in consumer market cannabis sales. Increase in production from Aurora Sky and the company’s Bradford facility might have also contributed to growth.

Per the preliminary results released by the company, net cannabis revenues are projected to range between $90 million and $95 million in the fourth-quarter fiscal 2019, with growth anticipated across all key business segments, in both Canadian and international, and consumer markets (read more: What’s in Store for Aurora Cannabis in Q4 Earnings?).

Further, the company is likely to exhibit growth in medical cannabis sales in the to-be-reported quarter driven by consistent growth with regard to patient base.

One of the most important key performance indicators of Aurora Cannabis remains the quantity of kilograms produced, which in turn reflects profitability. In fact, going by the preliminary results released, production available for sale for fiscal fourth quarter of 2019 is anticipated to be at the upper end of the range between 25,000 kg and 30,000 kg (exceeding the prior guidance of 25,000 kgs).

According to the commitment made by the company in January this year, focus is on disciplined execution and cost management, which in turn is likely to have a positive impact on gross margin. Consequently, we expect to see improvement in the same in the soon-to-be-reported quarter.

Aurora Cannabis has been successfully executing growth and expansion strategy that has led to sustained revenue growth. In fact, in June 2019, the company announced plans for expansion of the consumer cannabis market into vapes, concentrates, and edibles. The company has plans to produce new, high-quality products across Canada in a variety of product categories through a combination of new and improved facilities.

In July, the company received Health Canada licenses for outdoor cultivation at two Canadian sites – Quebec and British Columbia. These research sites will enable the company to develop new technology, genetics and intellectual property that will drive sustainable, high-quality outdoor production. This in turn is likely to contribute to the company’s overall performance in the upcoming quarterly results.

However, intense competition in the medical marijuana space continues to plague the company, thereby affecting overall results.

Here’s What the Quantitative Model Predicts:

Our proven Zacks model clearly shows that a company with a solid Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) has fair chances of beating estimates if it also has a positive Earnings ESP. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Aurora Cannabis has a Zacks Rank #4 (Sell) and an Earnings ESP of +12.50%, a combination that makes surprise prediction difficult.

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

Peer Releases

Here are three stocks that reported solid results in this earnings season.

CONMED Corporation (NASDAQ: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. (NYSE: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.

Intuitive Surgical, Inc. (NASDAQ:ISRG) reported third-quarter 2019 adjusted earnings per share of $3.25, which beat the Zacks Consensus Estimate of $2.85. Revenues were $1.1 billion, surpassing the Zacks Consensus Estimate of $1.03 billion. The company carries a Zacks Rank #2.

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