Aurora Earnings: Financial Results and Share Dilution Within Our Expectations

No-moat Aurora’s fiscal first-quarter results were largely in line with our expectations, highlighted by decent revenue growth and continuation of positive albeit small, adjusted EBITDA. Although dilution of existing shareholders continued, it was largely within our forecast, so we don’t expect a major change to our fair value estimates of $2.30 and CAD 3.00 per share outside of the effect of currency exchange rates. Shares trade well below our fair value estimates, but we re-emphasize our Extreme Uncertainty Rating amid the threat of material value destruction. We see better risk-adjusted upside in U.S. multistate operator stocks, both from exposure to more favorable legal American markets as well as a lower risk of value destruction.