The cannabis industry is poised for unprecedented growth in the coming years. And of all the Canadian marijuana stocks currently on the market, Aurora Cannabis (NYSE:ACB) is undoubtedly an industry favorite.
There are many reasons for ACB stock’s popularity. The company is a favorite among millennial investors, it leads the cannabis industry in production volume, and it’s quickly expanding globally.
But Aurora stock is also down over 50% from a year ago. The stock price is currently trading around $3.25 per share, which is coming close to its 52-week low. And Wall Street is divided about whether investors should buy, sell or hold the company’s shares. So Aurora Cannabis investors need some good news right about now.
The company is scheduled to deliver its fiscal 2020 second-quarter earnings on Thursday after market close. Listed below are three things investors will be looking to see from the company’s latest earnings report.
1. Wholesale Cannabis Revenue
Wholesale cannabis revenue is marijuana that is being sold to another cannabis company at wholesale prices. These types of sales have become common among Canadian cannabis companies as they wait for regulatory approval from Health Canada.
And since Aurora Cannabis leads the pack in marijuana production, the company is able to earn additional revenue through wholesale deals. However, there are a few problems with this scenario.
For one thing, the margins aren’t as good as what the company would earn from retail sales. And if wholesale cannabis sales make up a majority of the company’s revenue, this could be an indication that the company is having a hard time getting its product to market.
2. International Sales
One of ACB stock’s selling points is that it is expanding internationally much faster than any other cannabis company. The company currently has deals in place with at least 25 different countries, which is a figure unmatched by any other cannabis company.
However, Aurora’s international sales have been weak so far as the company struggles to manage its domestic demand. The company’s international push is a long-term strategy, but investors will still be looking for at least some signs of quarterly growth.
3. How Much Cash ACB Stock Is Burning Through
And finally, investors will be looking to see how much cash Aurora Cannabis is burning through. The company has been very low on cash resources, and unlike Canopy Growth (NYSE:CGC), it doesn’t have a large brand partnership to help.
So investors will be looking to see how the company is managing the cash it does have. And they’ll be looking to see if company management has plans to preserve cash going forward.
Company management is unusually quiet about the upcoming earnings report. That is probably a good strategy, given that Aurora Cannabis stock missed its guidance on a previous report. Ultimately, we’ll have to wait and see what management has to say.
As of this writing, Jamie Johnson did not hold a position in any of the aforementioned securities.