Aurora Cannabis (ACB.TO) Stock Analysis


40
11 shares, 40 points

Breakdown of Aurora Cannabis Stock Analysis

Aurora Cannabis stock analysis brings to light some interesting metrics and when I say interesting I do not mean in a good way.  ACB is a marijuana stock and as such has metrics that are all over the map and would send most investors running for the hills.  With that being said it has poor financials because it is in an industry that is just “budding”  sorry couldn’t resist:)  A lot of investors are banking that the legal marijuana industry in Canada will pay off in a big way.  Check out the ACB Stock Price page for updated Aurora stock price.

SymbolLast Price52 Week High52 Week Low

Aurora Cannabis 52 Week High & Low Stock Price

✖ This metric does not give me much as ACB stock price is close to its 52 week high, so does it have much room to go higher? Some might say yes because it is more of a momentum play, but I would argue that with legalization a week away I think there will be some hiccups with the rollout and supply problems etc and this will work against the price.

Market CapAverage VolumeTotal CashTotal Debt

Market Cap

✖ I just cannot wrap my head around the market cap for Aurora Cannabis as the financial numbers just do not support such a value.  again I think people are investing in the hope that the company grows into this value.

Average Volume

✔ Lots of volume in terms of trades for ACB.TO stock, so no worries about getting in or out of a position.

Total Cash & Debt

✖ I like to look at these two financial metrics together and what I want to see is the total cash going up and the total debt going down.  I want these two metrics moving in opposite directions and I obviously like to see total cash higher than total debt.

P/E RatioPrice To BookPEG RatioPrice To Sales Trailing 12 Months

P/E Ratio

✖ Aurora Cannabis P/E ratio is 80.80 which is too rich for my blood.  Again I think investors are hoping that the company grows into this number, but even when I look at the forward P/E for ACB.TO it is 75.88 which is still very high.

Price To Book

✖Aurora’s P/B is 4.42 and this is very high for me, I prefer to invest in companies with a price to book close to 1.  I would normally compare current P/B to the stocks historical average P/B, but with Aurora, we do not have a history to look at so no historical numbers to compare with.

Price to Expected Growth

✖ Aurora’s PEG ratio is 1.8 which is over where I like to see it.  I look for PEG to be closer to 1.

Price to Sales

✖ This metric is a big fat X for me!  The current price to sales ratio for ACB stock is 211.01.  This means investors are paying a very large premium for the sales, I want to see a price to sales ratio closer to 2.

Current RatioProfit MarginsReturn On EquityRevenue Growth

Current Ratio

✔ ACB current ratio is good and is current at 2.92 and I like a minimum of close to 2, so is well above my threshold.

Profit Margins

✔ I like the profit margins for Aurora Cannabis as it is currently 130.33%

Return On Equity

✔ The ROE for Aurora is currently 7.77% which is not great but is above the pharmaceutical industry average of 5.10%.

Revenue Growth

✔ The current revenue growth is very good at 222.60%.  The tricky part for this financial metric is marijuana is not even legal yet and so this might explode once legalization rolls out in the next week.

Dividend YieldHeld Percent InsidersTarget High PriceTarget Low Price

Dividend Yield

✖ This one is simple!  There is no dividend paid by Aurora Cannabis currently and I doubt they will pay one anytime soon.

Stock Held By Insiders

✖ This number is between 0-4%  I have found conflicting reports on the number of shares held by insiders at the company.  In any case, the percentage of stock held by insiders is very low and I like to see a good percentage of stock held by insiders.  The more people at the company are invested in the company stock, The more interest they naturally have in increasing the stock price.

Target High & Low Price

✖ The current ACB.TO stock price is close to the forecasted high price and well above the low forecast price.  Ideally, I want to see the current price below both the high and the low target price.

 

Buy, Hold or Sell Aurora Cannabis Stock?

For me, ACB Stock is a sell.  I would not invest in this stock as it is currently more of a speculative investment on the hope that the legal marijuana industry in Canada with be massive.  In my analysis of the stock as listed above it does not yield great results as Aurora Cannabis only achieved 5 check marks out of a total of 15.  For me, I am taking a wait and see approach to Marijuana stocks, and will only consider investing once valuations come down to reasonable levels.  Also, I want to see how the legal marijuana market matures and what the demand is once is legal.

 

 

 

This is not financial advice and all financial investments carry risks. Investors should seek financial advice from professionals before making any investment or financial decision.  I wrote this article myself and it expresses my opinions.  I currently do not hold any positions in the stocks mentioned in the above article.


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40
11 shares, 40 points

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