Aphria Stock Outperforms in 2019: All Eyes on Second Quarter Earnings

Aphria stock

2019 has not been a great year for the cannabis industry, and many of the leading companies have found it difficult to operate smoothly at different times. However, amidst widespread underperformance, Aphria Inc (TSX:APHA) (NYSE:APHA) has managed to emerge as one of the better performers. Aphria stock has lost only 20% in 2019, and as the company readies to post its fiscal Q2 2020 financial results on January 14, investors will be looking closely at its performance.

Key Metrics to Watch

Here is a look at some of the things that investors should look for when the company announces its quarterly results in January.

The most important thing to look for is pretty straightforward, and it relates to the sequential growth in sales. In its Q1 2020 period, the company managed to generate revenue of $126 million CAD. That reflected year-on-year growth but did not manage to generate sequential growth from the fiscal fourth quarter.

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In addition to that, in this quarter, the company’s performance will be compared against performance in the prior-year period when recreational pot had been legalized in Canada and, hence, it makes for an important observation.

Aphria stock is up by 3.70% at $4.90 USD.

Another major thing to watch out for is the company's other income. The company managed to turn a profit in the previous two quarters, but much of this was due to $20 million CAD worth of non-operating income. Since these incomes are not recurring in nature, it is important for investors and market watchers to figure out what sort of impact it eventually has on Aphria’s bottom line. It will also make it clear whether the company can remain profitable without such incomes in the coming quarters.

Last but certainly not least is that investors will also need to watch out for what sort of cash burn the company is going through. Considering the fact that cash burn has been a recurring issue in the cannabis industry, it would be important to see whether Aphria is able to improve the rate at which it is burning cash. At this point in time, the company’s cash position is strong, but Aphria stock investors would definitely want to see if the company is able to rein in the costs.

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