Aphria up 77% in 4 Weeks: Too Late to Buy?

Earnings season kicks off this week. This is the most important time of the quarter for cannabis stocks. This is the time when companies release their quarterly earnings reports to update shareholders on important performance data such as sales and earnings.

Studies show that these reports have a big impact on a company’s share price – and that can create a great investment opportunity.

Put simply, a company that beats earnings expectations should see its share price rise for the next few weeks and months. Conversely, companies that miss earnings expectations should see shares drift lower in the following week and months.

Today I am going to reveal the Canadian cannabis industry leader that just crushed earnings expectations – and could see share prices increase over the next few weeks and months.

Aphria (APHA) is an early leader in Canada’s legal cannabis industry with a fast-growing international business.

Aphria just reported third-quarter earnings, crushing expectations and setting the company apart from its industry peers.

Here are some more details.

  • Net revenue of $144.4 million in the third quarter, an increase of 96% from the prior year’s quarter and an increase of 20% from the prior quarter.
  • Operating income of $8.7 million in the third quarter, compared to a loss of $9.6 million in the prior quarter.
  • $515 million in cash on the balance sheet.

Here’s a link to the full earnings report if anyone wants to take a look.

Why these results are so good?

Aphria delivered 96% revenue growth in 12 months – not only is that the best in this class of early industry leaders – it absolutely crushes its peers.

For example, Organigram Holdings (OGI), another early industry leader in Canada, just reported second-quarter earnings that looked a lot different than Aphria. While Aphria was delivering 96% revenue growth, Organigram reported a 13.7% decline in revenue from last year.

Meanwhile, Aurora Cannabis (ACB), another early Canadian industry leader, just executed a 12-to-1 reverse stock split in order to boost liquidity and avoid having its shares de-listed by the New York Stock Exchange. This is bad news for shareholders.

Aphria is much better capitalized with $515 million in cash and equivalents on the balance sheet.

Comparing these results, it’s clear that Aphria is executing better than its peers and capturing more market share in Canada’s high-growth legal cannabis industry.

This is the reason that Aphria shares are up 77% in the last month while Aurora and Organigram are up 7% and 2%.

Take a look at the comparison below.

Despite Aphria’s 77% gain in the last month, shares are still trading 60% below the 52-week high.

The Big Picture on Aphria

Aphria just reported excellent third-quarter results that crushed expectations and blew past its peers. This clearly shows that Aphria is executing better than its peers and capturing big market share.

Shares are up 77% in the last month but, despite that bounce, Aphria is still trading 60% below the 52-week high.

About the Author

Michael Vodicka is an equity analyst with more than 20 years of experience trading and investing. His research has been featured in some of the industry’s most respected publications. He has been investing and leading investors in the cannabis sector since 2013.