With marijuana use legal in Canada on the 17th of October, recreational cannabis public companies are under the microscope by investors, regulators and anyone curious about the "weed." Our article is not designed to offer investment advice or represents an offer to buy or sell cannabis stocks, and merely a means to track what’s happening in Canada and whether or not such events and circumstances may have a bearing on the markets in the U.S.A. Next week, four significant Canada focused public cannabis companies are to report earnings and issue other reports, especially post-legalization commentaries --- Aurora Cannabis Inc., Tilray Inc Cronos Group Inc., and Canopy Growth Corp. Today’s profile is AURORA CANNABIS INC. (ACB) $7.44 ACB plans to report earnings and issue commentary on Monday. ACB produces and distributes medical cannabis products in Canada and internationally. It is vertically integrated and horizontally diversified across various segments of the cannabis value chain, from facility engineering and design to cannabis breeding, genetics research, production, derivatives, high value-add product development, home cultivation, wholesale, and retail distribution. With a market canalization of $6.86 billion and a debt to equity of 13. ACB is valued too high for what the business is worth. The “enterprise value” of $7.44 billion appears overstated with the forward earnings, and leveraged cash flow suggests ACB would need to increase years sales by a factor of 5 times to show a profit. That event is not possible in the next seven years since ACB would require a capital infusion of $1.1 billion. Whether available by further stock sales or loans, the number is higher than the intrinsic value of the company. With 960 million shares outstanding, book value of $2.06 per shares and $152 million in debt, ACB overvalued.
As the numbers indicate, Aurora Cannabis Inc. represents a business profile that appears faulted. Valuation Measures Market Cap - 6.86B Enterprise Value - 7.44B Trailing P/E - 63.19 Forward P/E - N/A PEG Ratio (5 yr expected) - N/A Price/Sales (ttm) - 165.29 Price/Book (mrq) - 3.46 Enterprise Value/Revenue - 179.41 Enterprise Value/EBITDA -145.95 Profitability Profit Margin 130.33% Operating Margin (ttm) -145.13% Management Effectiveness Return on Assets (ttm) -4.48% Return on Equity (ttm) 7.77% Income Statement Revenue (ttm) 41.49M Revenue Per Share (ttm) 0.09 Quarterly Revenue Growth (yoy) 222.60% Gross Profit (ttm) 43.52M EBITDA -51M Net Income Avi to Common (ttm) 54.08M Diluted EPS (ttm) 0.11 Quarterly Earnings Growth (yoy) N/A Balance Sheet Total Cash (mrq) 111.54M Total Cash Per Share (mrq) 0.12 Total Debt (mrq) 152.76M Total Debt/Equity (mrq) 13.00 Current Ratio (mrq) 2.92 Book Value Per Share (mrq) 2.06 Cash Flow Statement Operating Cash Flow (ttm) -61.39M Levered Free Cash Flow (ttm) -215.48M 52-Week Change 87.13% S&P500 52-Week Change 8.60% 52 Week High 42,500.00 52 Week Low 4.06 50-Day Moving Average 7.11 200-Day Moving Average 7.11 Share Statistics Avg Vol (3 month) 21.28M Avg Vol (10 day) 18.36M Shares Outstanding 960.96M Float 921.5M % Held by Insiders 3.48% % Held by Institutions 5.05%