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Aurora Cannabis (TSE:ACB)
TSX:ACB
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Aurora Cannabis
(TSX:ACB)
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Rating:46Neutral
Price Target:
C$5.00
▲(10.62% Upside)
The score is held down primarily by weak financial performance (profitability and cash flow challenges) and bearish technical trend signals. These are only partially offset by a more positive earnings-call outlook and guidance centered on higher-margin medical growth and improved adjusted EBITDA, while valuation remains constrained by negative earnings and no dividend support.
Positive Factors
High-margin medical revenue mix
A dominant, growing medical segment (81% of revenue, ~95% of adjusted gross profit) provides durable margin stability and revenue resilience. Focusing on higher-margin medical sales reduces exposure to low-margin consumer volatility and supports management’s 10–15% medical revenue growth guidance.
Strong adjusted gross margins
High and improving adjusted gross margins (62% consolidated; 69% medical) reflect cost-efficient cultivation and favorable product mix. Sustained margin advantage underpins cash generation potential and gives pricing/operational room to invest in international scale without eroding core profitability.
Conservative liquidity and low leverage
A strong cash position ($154M) and absence of cannabis-related debt provide strategic optionality for capex, M&A, or weathering operational shocks. Manageable leverage supports continued investment in higher-margin medical markets while limiting refinancing risk during industry volatility.
Negative Factors
Profitability & cash conversion weakness
Despite solid gross margins, recurring negative EBIT and weak net margins signal incomplete operational leverage. Persistent cash conversion issues and historically negative free cash flow constrain reinvestment capacity and make long-term margin improvement contingent on sustained operational fixes.
Rising SG&A from international expansion
Material SG&A growth to support Europe and Australia expansion elevates fixed cost base and reduces operating leverage. If revenue ramp in those markets lags expectations, higher recurring overhead can compress adjusted EBITDA and delay attainment of sustained profitability.
Plant propagation margin collapse & write-offs
Sharp margin deterioration and inventory write-offs in plant propagation reveal execution and cost control issues in a subsegment. Even with a divestiture plan, legacy losses and margin volatility can drag consolidated results and complicate near-term free cash flow recovery.
Aurora Cannabis (ACB) vs. iShares MSCI Canada ETF (EWC)
Market Cap
$289.76M
Dividend YieldN/A
Average Volume (3M)474.44K
Price to Earnings (P/E)―
Beta (1Y)1.71
Revenue Growth23.87%
EPS Growth-19.57%
CountryCA
Employees1,073
SectorHealthcare
Sector Strength45
IndustryDrug Manufacturers - Specialty & Generic
Share Statistics
EPS (TTM)0.03
Shares Outstanding56,703,785
10 Day Avg. Volume490,579
30 Day Avg. Volume474,445
Financial Highlights & Ratios
PEG Ratio-2.12
Price to Book (P/B)0.61
Price to Sales (P/S)1.01
P/FCF Ratio-121.14
Enterprise Value/Market Cap1.04
Enterprise Value/Revenue0.81
Enterprise Value/Gross Profit2.89
Enterprise Value/Ebitda12.81
Forecast
1Y Price Target
$9.12Price Target Upside101.84% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering3
EPS Forecast (FY)N/A
Revenue Forecast (FY)N/A
Aurora Cannabis Business Overview & Revenue Model
Company DescriptionAurora Cannabis Inc. produces, distributes, and sells cannabis and cannabis derivative products in Canada and internationally. It also engages in facility engineering and design, cannabis breeding, research, production, derivatives, product development, wholesale, and retail distribution activities. The company produces various strains of dried cannabis, cannabis oil and capsules, and topical kits for medical patients. It also sells vaporizers; consumable vaporizer accessories; and herb mills for using CanniMed herbal cannabis products, as well as grinders and vaporizer lockable containers. In addition, the company engages in the development of medical cannabis products at various stages of development, including oral, topical, edible, and inhalable products; and operation of CanvasRX, a network of cannabis counseling and outreach centers. Further, it provides patient counselling services; design and construction services; and cannabis analytical product testing services. The company's brand portfolio includes Aurora, Aurora Drift, San Rafael '71, Daily Special, AltaVie, MedReleaf, CanniMed, Whistler, Woodstock, and WMMC. Aurora Cannabis Inc. is headquartered in Edmonton, Canada.
How the Company Makes MoneyAurora Cannabis generates revenue primarily through the sale of cannabis products, which include both medical and recreational offerings. The company operates several production facilities that adhere to strict quality and regulatory standards, allowing it to supply products to various Canadian provinces and international markets. Key revenue streams include direct sales to consumers through retail outlets, online sales, and wholesale distribution to licensed retailers. Additionally, Aurora has formed significant partnerships with other companies and organizations to enhance its product offerings and expand distribution channels. The company also generates revenue through its investments in cannabis-related businesses and by leveraging its expertise in cultivation and production to provide consulting services to other cannabis enterprises.
Aurora Cannabis Earnings Call Summary
Earnings Call Date:Feb 04, 2026
(Q3-2026)
| % Change Since: |
Next Earnings Date:Jun 18, 2026
Earnings Call Sentiment Positive
The call emphasized material progress: top-line growth driven by a focused medical-cannabis strategy, strong high-single-digit revenue growth, healthy adjusted gross margins (62% consolidated; 69% medical), record international execution (Germany, Poland, Australia), positive adjusted EBITDA and free cash flow, and a conservative balance sheet with $154M cash and no cannabis-related debt. Management also announced strategic moves (exiting select Canadian consumer markets, divesting plant propagation stake, and an ATM up to $100M) designed to reallocate resources to higher-margin global medical markets. Offsetting this are deliberate shrinkage in the lower-margin Canadian consumer business (48% revenue decline by design), significant margin deterioration and write-offs in the plant propagation segment, higher SG&A to support international growth, modest YoY decline in adjusted EBITDA, and lower free cash flow versus the prior year. Overall, the operational and financial positives and the clear strategy to concentrate on a higher-margin global medical opportunity outweigh the operational headwinds and one-time/divestiture-related impacts, indicating constructive momentum and a cautiously positive outlook.Q3-2026 Updates
Positive Updates
Consolidated Revenue Growth
Net revenue of $94.2M in fiscal Q3 (period ended Dec 31, 2025), up 7% year-over-year, driven by record global medical cannabis performance.
Strong Medical Cannabis Performance
Global medical cannabis revenue of $76.2M, up 12% YoY, with international medical cannabis up 17%; medical cannabis represented 81% of net revenue (versus 77% prior year) and ~95% of adjusted gross profit.
High and Improving Margins
Consolidated adjusted gross margin improved 100 basis points to 62%; medical cannabis adjusted gross margin held at 69%, supporting adjusted gross profit of $55.6M (up 6% YoY).
Profitability and Cash Generation
Adjusted EBITDA of $18.5M and adjusted net income of $7.2M in Q3; positive free cash flow of $15.5M; cash, cash equivalents and short-term investments totaled $154M and the company reported no cannabis business-related debt.
Global Commercial Execution and Regulatory Positioning
Market leadership across key international markets: #1 in Poland (2025), #2 share in Australia, continued share gains in Germany; ~90% of annual manufacturing capacity produced in European and TGA GMP-certified facilities; three Canadian facilities received renewed GMP certification for three years.
Strategic Actions to Improve Focus and Capital Flexibility
Announced selective exit from lower-margin Canadian consumer cannabis markets and divestiture of controlling stake in plant propagation (Bevo) to reallocate high-quality flower and resources to higher-margin global medical cannabis; filed $100M at-the-market (ATM) equity program to fund accretive initiatives including cultivation capacity and M&A.
Full-Year Outlook Indicates Growth
Annual global medical cannabis net revenue guidance of $269M–$281M (expected 10%–15% growth) and consolidated adjusted EBITDA guidance of $52M–$57M (expected 5%–10% growth), with management expecting margins to remain strong driven by sales mix and operational efficiencies.
Negative Updates
Sharp Decline in Canadian Consumer Cannabis
Consumer cannabis net revenue declined 48% YoY to $5.2M (from $9.9M), reflecting the company's strategic reallocation of product and resources away from lower-margin consumer markets.
Plant Propagation Margin Compression and Write-Offs
People's plant propagation revenue rose 27% to $11.3M, but adjusted gross margin fell dramatically to 16% from 40% prior year, driven by higher contract labour and utilities costs and $1.1M of inventory write-offs (surplus plants).
Higher Operating Costs (SG&A)
Consolidated adjusted SG&A increased 14.5% YoY to $35.8M due to higher professional fees, additional headcount and contract labour in Europe and Australia supporting international growth; this pressure reduced operating leverage.
Adjusted EBITDA and Free Cash Flow Softness vs Prior Year
Adjusted EBITDA decreased modestly to $18.5M from $19.4M a year ago; free cash flow fell to $15.5M from $27.4M, with a $9.2M decrease in working capital recovery contributing to the contraction.
Near-Term Market and Pricing Pressure in Select Markets
Increased competition and price pressure noted in Germany's value segment and an influx of value products in the UK led to lower YoY sales; Australia transition from value to premium mix is expected to create near-term pressure on sales and gross profit during the portfolio premiumization.
Uncertainty from Regulatory Changes
Potential telehealth/regulatory modifications in Germany and ongoing evolution of market frameworks (e.g., telehealth-to-clinic prescription shifts) create regulatory uncertainty that could affect access dynamics and require executional agility.
Company Guidance
Management guided fiscal 2026 toward a medical‑first outcome, forecasting annual global medical cannabis net revenue to grow 10–15% to $269–$281 million (medical was ~81% of net revenue and ~95% of adjusted gross profit in Q3), consolidated adjusted EBITDA of $52–$57 million (up ~5–10% year‑over‑year), and sustained strong consolidated adjusted gross margins (Q3 was 62% consolidated and 69% for medical). They expect plant‑propagation revenue to follow normal seasonality (65–75% of that revenue in the first half of the calendar year), noted some one‑time cash costs in Q4 tied to exiting select Canadian consumer markets but said adjusted EBITDA should improve thereafter, and filed an ATM to raise up to $100 million for accretive uses (e.g., cultivation capacity, M&A); the quarter closed with $154 million cash and no cannabis business debt.Aurora Cannabis Financial Statement Overview
Summary
Modest revenue growth and a relatively healthy gross margin are offset by ongoing profitability issues (negative EBIT and weak net margin) and cash flow strain (negative free cash flow and weak cash conversion). Balance sheet leverage appears manageable with low debt-to-equity, but returns on equity remain minimal.Income Statement
Aurora Cannabis shows a modest revenue growth rate of 4.25% TTM, indicating some positive momentum. However, the company struggles with profitability, as evidenced by a negative EBIT margin and a very low net profit margin. The gross profit margin is relatively healthy at 54.65%, but the negative EBIT and net income highlight ongoing operational challenges.45
Neutral
Balance Sheet
The company's debt-to-equity ratio is low at 0.18, suggesting manageable leverage levels. However, the return on equity is minimal at 0.28%, indicating inefficient use of equity capital. The equity ratio is not explicitly calculated, but the balance sheet shows a stable equity position relative to assets.50
Neutral
Cash Flow
Aurora Cannabis faces cash flow challenges, with negative free cash flow and a declining free cash flow growth rate. The operating cash flow to net income ratio is low, reflecting difficulties in converting earnings into cash. The negative free cash flow to net income ratio further underscores cash management issues.40
Negative
| Breakdown | Dec 2025 | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 |
|---|---|---|---|---|---|
Income Statement | |||||
| Total Revenue | 343.29M | 270.28M | 233.29M | 221.34M | 245.25M |
| Gross Profit | 187.61M | 131.46M | -64.36M | 21.23M | -21.56M |
| EBITDA | 51.35M | -12.34M | -210.74M | -1.55B | -535.28M |
| Net Income | 1.59M | -69.33M | -265.33M | -1.72B | -693.63M |
Balance Sheet | |||||
| Total Assets | 852.67M | 838.67M | 926.32M | 1.08B | 2.60B |
| Cash, Cash Equivalents and Short-Term Investments | 138.47M | 117.47M | 300.84M | 439.14M | 425.21M |
| Total Debt | 104.58M | 104.79M | 227.52M | 269.49M | 399.55M |
| Total Liabilities | 244.07M | 236.80M | 409.19M | 422.00M | 567.03M |
| Stockholders Equity | 567.17M | 559.77M | 486.08M | 661.84M | 2.04B |
Cash Flow | |||||
| Free Cash Flow | -2.85M | -85.46M | -127.95M | -142.48M | -263.66M |
| Operating Cash Flow | 16.00M | -68.51M | -115.82M | -110.27M | -210.58M |
| Investing Cash Flow | -14.33M | -5.49M | -27.29M | -36.17M | -26.91M |
| Financing Cash Flow | -116.00K | -47.92M | -56.48M | 147.78M | 521.95M |
Aurora Cannabis Technical Analysis
Negative
4.52
Price Trends
6.14
Negative
6.60
Negative
6.68
Negative
Market Momentum
-0.28
Positive
23.45
Positive
13.13
Positive
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For TSE:ACB, the sentiment is Negative. The current price of 4.52 is below the 20-day moving average (MA) of 5.72, below the 50-day MA of 6.14, and below the 200-day MA of 6.68, indicating a bearish trend. The MACD of -0.28 indicates Positive momentum. The RSI at 23.45 is Positive, neither overbought nor oversold. The STOCH value of 13.13 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for TSE:ACB.
Aurora Cannabis Peers Comparison
UnderperformOutperform
Sector (51)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
75 Outperform | C$2.29B | 36.19 | 2.42% | ― | 6.18% | -28.69% | |
67 Neutral | C$1.35B | 26.77 | 3.34% | ― | 22.20% | ― | |
60 Neutral | C$2.01B | -9.49 | -9.95% | ― | 4.27% | 3.41% | |
58 Neutral | C$2.44B | -6.12 | -27.61% | ― | -3.38% | -31.35% | |
51 Neutral | $7.86B | -0.30 | -43.30% | 2.27% | 22.53% | -2.21% | |
47 Neutral | C$583.48M | -0.55 | -60.19% | ― | -0.67% | 58.98% | |
46 Neutral | $289.76M | -2.87 | -16.05% | ― | 23.87% | -19.57% |
* Healthcare Sector Average
TSE:ACB
Aurora Cannabis
4.52
-4.44
-49.55%
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TSE:GTII
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-7.98%
TSE:TRUL
Trulieve Cannabis
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2.52
37.17%
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.