Aphria stock has been attempting to recover over the past week after a severe decline since early September. Let's analyze the recent developments from Aphria Inc (TSX:APHA) (NYSE:APHA).
Stock Recovers on Value Buying
There is no doubt that the cannabis industry has been in a lot of trouble over the course of the past months, and many of the biggest companies have seen their stock prices crash significantly. One such stock is APHA, which has lost as much as 35% of its value since early September.
However, it should be noted that over the past week, Aphria stock has recovered over 22% from its recent low. Having said that, it is important to figure out the immediate prospects of Aphria before considering the increased volatility in the stock.
The cannabis industry has been hit by problems primarily arising out of the slow rollout of retail outlets and consequent oversupply. That being said, it is also important to note that the size of the total addressable market is going to grow, and hence, companies are making efforts to raise capacity. In this regard, the Aphria Diamond greenhouse facility could prove to be an advantage for the company.
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At the time of writing, Aphria stock is up 1.50% at $4.63 on the NYSE.
The Diamond facility is owned 51% by Aphria and has the capacity of producing 140,000 kilos of product annually. The company will have a total capacity of 255,000 kg every year. The company believes that this facility will help it to produce high-quality products and also improve the efficiency of its operation.
Reported Profitable Quarter
Now, it is important to point out that the current difficulties with the industry are expected to continue, but Aphria remains one of the few cannabis companies to have actually reported a profit in its latest quarter. In addition to that, at current levels, the company’s stock is only trading at an earnings ratio of 24.8. Additionally, amidst the problems in the industry, Aphria’s current inventory is 19.1% of expected sales in 2020, and that is much lower than some of its peers.
Aphria stock has lost almost 60% from its 52-week high of $10.95.
Featured image: Canva
