Aurora Cannabis Inc. (ACB) and Canopy Growth Corporation (CGC) are two leading cannabis producers. While ACB manufactures cannabis through horizontally and vertically integrated value chain production, CGC develops cannabis for…
both medical and recreational uses through two segments – Cannabis Hemp and other Consumer products.
Both companies have generated significant returns over the past five years. While ACB gained 28.7% over this period, CGC returned 1081.2%. In terms of six-month price performance, CGC is the clear winner with 29.6% gains versus ACB negative returns.
But which stock is the better buy now? Let’s find out.
On October 1st, CGC partnered with Acreage Holdings, Inc. to distribute its select THC beverage collection across the United States in summer 2021. CGC entered into a collaborative agreement with Martha Stewart and Marquee Brands to launch a new line of hemp-derived wellness supplements under Martha CBD. Additionally, CGC announced the opening of 10 new retail stores across Canada in August.
ACB is currently in the process of reducing costs through layoffs and shut down of unprofitable product lines. It is reportedly aiming to develop high-cost projects through external contractors to reduce overhead expenses for the next two quarters. This should allow the company to generate substantial profits from operations.
Recent Financial Results
CGC’s net revenue grew 22% year-over-year to C$110 million in the fiscal first quarter ended June 2020. Gross margin increased 1,300 basis points sequentially to 7%. CGC ended the quarter with C$2 billion in cash and short-term investments.
ACB’s adjusted gross margin on consumer and medical cannabis revenue increased 600 basis points and 700 basis points, respectively, in the fiscal fourth quarter ended June 2020. Medical cannabis revenue grew 4% from the previous quarter to $32.20 million. The company had $162.18 million in cash as of June 30th.
Past and Expected Financial Performance
ACB’s revenue and total assets increased at a CAGR of 149% and 105.1%, respectively, over the past three years. Analysts expect EPS and revenue to grow 96.4% and 12.7%, respectively, in 2021.
CGC’s revenue and total assets increased at a CAGR of 104.7% and 109.6%, respectively, over the past three years. Analysts expect EPS and revenue to…
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