Is Aurora Cannabis (ACB) a Good Stock to Buy before Earnings?
Aurora Cannabis (ACB) is set to report its quarterly earnings on Tuesday, June 18, before the market opens. Analysts expect the cannabis company to post earnings of around $0.09 per share, a big improvement from last year's loss of -$0.29 per share. However, it's lower than last quarter's surprise profit of $0.42 per share that beat expectations by a wide margin. Meanwhile, revenue is projected to reach $65.4 million, which is also higher than last year's figure of $49.6 million. Investors will be watching closely to see if Aurora can keep the momentum going.
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One of Aurora's key strengths has been its medical cannabis business, particularly in international markets, where sales increased by 112% year-over-year in the previous quarter. This resulted in a 37% increase in total revenue, alongside a record-high adjusted EBITDA of $23.1 million, which equated to a growth of 316% and marked the ninth consecutive quarter of positive adjusted EBITDA. The firm also has a healthy balance sheet with about $180 million in cash and no cannabis-related debt.
As the earnings date approaches, investors should focus on whether or not Aurora can stay profitable and beat the $0.09 EPS estimate. Also important will be what the company says about its Canadian recreational sales, how it plans to keep costs down, and investments for further growth. It is worth noting that Aurora stock is up nearly 44% on the year, so a strong report could keep that rally going, while a weak one could trigger a significant pullback.
Options Traders Anticipate a Large Move
Using TipRanks' Options tool, we can see what options traders are expecting from the stock immediately after its earnings report. The expected earnings move is determined by calculating the at-the-money straddle of the options closest to expiration after the earnings announcement. If this sounds complicated, don't worry, the Options tool does this for you. Indeed, it currently says that options traders are expecting a large 15.6% move in either direction.
Is ACB Stock a Good Buy?
Using TipRanks' technical analysis tool, the indicators seem to point to a positive outlook for ACB stock. Indeed, the summary section pictured below shows that 13 indicators are Bullish, compared to five Neutral and four Bearish indicators.
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