Should You Buy, Hold or Sell ACB Stock Post Q3 Earnings Release?

Aurora Cannabis ACB recently reported its third-quarter results for fiscal 2026 (year ending March 2026). Both earnings and sales beat our consensus estimates.

This Canada-based cannabis operator posted an adjusted EPS of 9 cents, significantly higher than the 4 cents posted in the year-ago period. Sales rose 7% year over year to around $68 million (~C$94 million), primarily driven by encouraging momentum for Aurora Cannabis’ medical cannabis business.

However, long-term investors typically focus beyond a single quarter’s numbers and assess broader fundamentals. Let’s explore the company’s fundamentals to better understand how to play the stock after its latest results.

Medical Cannabis: A Key Driver of ACB’s Top-line

For the nine months of fiscal 2026 (year ended March 2026), Aurora Cannabis delivered solid top-line growth, driven primarily by record performance in global medical cannabis. Sales from the company’s medical cannabis segment rose about 20% year over year to C$211.5 million, accounting for nearly 75% of total revenues.

This growth was largely fueled by higher sales in international markets like Australia, Germany and Poland, as well as increased revenues in Canada from insurance-covered and self-paying patients.

Higher sales also supported healthy margin performance in the medical cannabis segment. While ACB does not disclose segment margins on a nine-month basis, management reported year-over-year margin expansion in the medical cannabis business in the first two quarters of fiscal 2026 but remained stable in the third quarter. This was supported by higher-margin international sales, premium products and ongoing production efficiencies.

The margin gains, combined with disciplined cost control, helped adjusted EBITDA rise 35% year over year to C$44.7 million for the nine months ended September 2025, highlighting the operating leverage embedded in the company’s medical-focused model.

Importantly, Aurora Cannabis has reinforced this strategy through a series of recent strategic decisions aimed at reallocating capital and operational focus toward its high-margin global medical cannabis business. Following a comprehensive review, the company announced plans to prioritize resources toward international medical markets, where it sees the strongest growth visibility and profitability, while streamlining or exiting lower-return activities. Management believes these actions will further strengthen Aurora Cannabis’ leadership position in regulated medical cannabis markets and enhance long-term returns.

Looking ahead, management expects global medical cannabis to remain the company’s primary growth engine. Aurora expects that annual global medical cannabis revenue will reach C$269-C$281 million in fiscal 2026, implying 10-15% year-over-year growth, driven by continued international expansion, new product introductions and increased scale in key European markets. The company also expects full-year adjusted EBITDA between C$52-C$57 million, while maintaining positive free cash flow generation as operating efficiencies continue to improve.

Cannabis Consumer Biz Continues to Deteriorate

Aurora Cannabis continues to face pressure in its consumer cannabis business, even as its medical segment delivers consistent growth. Persistent price compression and intense competition in Canada’s adult-use market have weighed on revenues and margins, limiting the segment’s contribution to overall performance.

In response to these challenges, Aurora Cannabis has formally announced plans to exit select lower-margin consumer cannabis markets in Canada beginning in the fourth quarter of fiscal 2026. It is deliberately reallocating product and resources away from recreational offerings and toward its higher-margin global medical cannabis business, where pricing power, regulatory barriers and demand visibility are more attractive.

Management noted that the consumer segment carries higher sales and marketing costs, and that this strategic pullback is expected to result in lower adjusted SG&A and improved consolidated adjusted gross margins in the coming quarters. However, the transition is not without near-term friction, as the company expects one-time costs to impact cash flow in the fourth quarter of fiscal 2026.

Cutthroat Competition in the Cannabis Space

Aurora Cannabis competes in an overcrowded market against the likes of Canopy Growth CGC and Tilray Brands TLRY, both of which are also focused on international expansion and cost efficiency.

Companies like Canopy and Tilray are also expanding their footprints beyond geographic borders, in markets like Europe and Australia. This could lead to more aggressive moves from these peers and possibly further consolidation in the sector.

ACB Stock Performance & Valuation Estimates

The stock has underperformed the industry in the past year, as seen in the chart below.

Estimate movements for fiscal 2026 and 2027 have remained unchanged in the last 30 days.

How to Play ACB Stock?

Despite improving fundamentals in global medical cannabis, Aurora Cannabis currently carries a Zacks Rank #4 (Sell) and is not recommended for new investments.

While the company’s medical-focused strategy and margin discipline are positives, these are offset by continued weakness in the consumer cannabis business, restructuring-related costs and intense competition across international markets. In addition, the unchanged earnings estimates in the past 30 days signal limited near-term upside potential.

Although potential U.S. marijuana reclassification could benefit medical cannabis, Aurora has minimal operating exposure to the market, reducing its ability to directly capitalize on potential federal reforms.

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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