Aphria stock is gaining a bit of momentum after Aphria Inc (TSX:APHA) (NYSE:APHA) announced that its subsidiary Marigold Projects Jamaica has received a retail Herb House license from Jamaica's Cannabis Licensing Authority.
In a new development, Aphria’s Jamaican subsidiary, known as Marigold, has been awarded a retail herb house license. By the provisions of this license, Marigold will now be able to open its very first retail outlet located in Kingston.
Analysis: Aphria Stock Ahead of Earnings
Plenty of marijuana stocks are now going through a bit of trouble as investors try to figure out the industry’s future growth prospects, and some stocks have hit 52-week lows as a result. One of those stocks is Aphria, which has had a tough time of late.
Since its previous earnings report, Aphria stock has lost as much as 30% in the intervening period. It is going to release its Q4 2019 earnings report on Thursday this week, and perhaps it is a good time to figure out whether one should invest in APHA stock or not.
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Although there are certain significant red flags with regards to the company, it needs to be kept in mind that the prevalent trends indicate that the company’s earnings could prove to be better than expected. If that is the case, then Aphria stock has potential. That being said, analysts also believe that APHA should be a short-term play at the moment since the company’s long-term prospects are still a bit cloudy.
It is also important to point out that there are plenty of factors that could put off investors from Aphria as well. Its cultivation capabilities are not up to the mark when compared to peers like Canopy Growth Corporation (TSX:WEED) (NYSE:CGC) and Aurora Cannabis (TSX:ACB) (NYSE:ACB). In the previous quarter, it only sold 2,600 kilos of cannabis. Some might argue that Aphria did manage to raise its revenues significantly in the previous quarter, but it is important to keep in mind that almost the entirety of the gains came from acquisitions.
In addition to that, Aphria has not been able to manage its margins, and currently it is going down like a stone. In Q3, the margins were only 18%, down from 47% back in Q2, and when it comes to the core business, it dropped from 50% to 36% during the same period. Investors should approach Aphria stock with caution if they are looking for a long-term play.
At the time of writing, APHA stock is trading higher 0.50% at $5.53 on the NYSE.
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