What's in Store for Aurora Cannabis (ACB) in Q3 Earnings?

Aurora Cannabis Inc. ACB is scheduled to report third-quarter fiscal 2019 results on May 15, before the opening bell.

Which Way Are Q3 Estimates Treading?

For the third quarter, the Zacks Consensus Estimate for Aurora Cannabis’ bottom line stands at a loss of 3 cents per share. The same for revenues is pegged at $55.1 million, suggesting an improvement of 332.7% from the year-ago quarter.

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

Aurora Cannabis Inc. Price and EPS Surprise

Aurora Cannabis Inc. price-eps-surprise | Aurora Cannabis Inc. Quote

Factors to Consider

Aurora Cannabis is likely to witness net revenue growth in the soon-to-be-reported quarter on the back of sustained robust growth achieved through continued execution of its consumer and medical strategies.

Introduction of derivative products in the international markets and launch of new higher value-added derivative product lines, with respect to expected changes in Health Canada regulations, are likely to further contribute to revenue growth and margin expansion in the to-be-reported quarter.

Further, the company has made progress in terms of clinical case studies and is commencing around 40 clinical trials and medical case studies along with additional seven pre-clinical studies. This in turn helps strengthen the company’s position as one of the leaders in medical space in Canada and international markets. On this basis, the company is well-poised to capture a large part of the medical market both in Canada and the present 22 additional countries abroad.

This in turn will allow the company to scale-up output and have more products available for sale both in Canada and international markets. This is turn is likely to drive revenues in the to-be-reported quarter.

The company has been able to maintain its market leadership in Germany and other key international markets and we expect the third-quarter fiscal results to benefit from this solid international footprint.

With Aurora Sky operating at its full capacity along with consistent reduction in operating costs, the company expects the cash cost to produce per gram might trend substantially lower. This is likely to bolster the company’s performance in the to-be-reported quarter.

However, intense competition in the medical marijuana space is a headwind.

Given the ongoing disciplined cost management, selling, general and administrative costs are expected to increase modestly in comparison with revenue growth in the to-be-reported quarter.

What Does Our Model Say?

Per our proven model, a stock needs to have a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) to deliver a positive earnings surprise in the quarter. This is the case here.

Earnings ESP: Aurora Cannabis has an Earnings ESP of +17.50%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Aurora Cannabis carries a Zacks Rank #3.

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

Stocks Worth a Look

Here are a few stocks that are likely to post a beat this earnings season.

HEXO Corp. HEXO has an Earnings ESP of +14.29% and a Zacks Rank #3.

STERIS plc STE has an Earnings ESP of +0.35% and a Zacks Rank #2.

lululemon athletica LULU has an Earnings ESP of +0.51% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

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