Aurora Cannabis Inc. Common Shares (ACB) fair value

ACCE thesis

Aurora Cannabis makes cannabis flower, vapes, edibles and cannabinoid-based pharmaceutical products, selling largely in Canada and, through its medical and international operations, in Europe and Israel. The structural positive is a 44.2% gross margin, which says the product portfolio still earns decent unit economics even as overhead drags the business below breakeven. The company is shrinking, with revenue down 8.8%, and the operating margin of -12.9% means it is still losing money at the operating line. The forward P/E of 109.9 against a trailing P/E of zero tells us earnings are expected to recover from a loss base, but that recovery is thin and far from proven. With a 37/100 score and a $260M market cap, the case for a deeper look rests on whether cost cuts can close the gap between that gross margin and the operating loss, and the data here does not yet show that happening.