Nothing seems to be going right for Aurora Cannabis (ACB -1.80%). Last year, the Canadian pot grower's shares plunged by 56.5%, and while the cannabis industry as a whole performed poorly, Aurora's performance was bad even by that less-than-flattering standard. More recently, Aurora Cannabis announced that its founder and CEO, Terry Booth, would be stepping down. The company also announced it was eliminating 500 employees -- including about 25% of its corporate positions -- in an attempt to cut costs.

Furthermore, Aurora's most recent financial results failed to reassure investors that the future is looking bright. The company's total net revenue of 56 million Canadian dollars represented a 26% sequential decrease, and Aurora recorded a net loss of more than CA$1.3 billion. 

Amid all these troubles, Aurora's shares are worth a mere $1.66, but a cheap price tag doesn't necessarily make for a cheap stock. With that in mind, let's dig in a little deeper and find out whether Aurora Cannabis is a stock worth buying right now. 

Cannabis leaf on top of map of Canada

Image source: Getty Images.

The buy thesis

In my view, there are two main reasons to consider buying shares of Aurora. First, there's the company's position in the Canadian market. Aurora boasts supply agreements with nine Canadian provinces and territories, and it has one of the highest projected peak production capacities.

These factors could help Aurora deliver better financial results in its domestic market. The province of Ontario -- the largest by population -- will be opening up more cannabis stores this year, which should lead to a more favorable retail environment from which cannabis companies will be able to benefit. The market for cannabis derivative products opened on Oct. 17, 2019, and Aurora is looking to profit from this opportunity as well.

The company has already introduced several derivative products to be sold in legally licensed retail cannabis stores, including "vapes, concentrates, gummies, chocolates, mints and cookies." Given that these products tend to carry higher margins than dried cannabis products -- and given Aurora's footprints in its domestic market -- the company could benefit immensely from the cannabis derivative market. 

The second reason to consider buying shares of Aurora is the company's international presence. The pot grower has assets in about two dozen countries around the world, and Aurora claims to be "positioned to capitalize on nascent markets." If marijuana laws around the world become less restrictive -- as the company hopes they will -- Aurora could be one of the big winners.

The avoid thesis

There are several reasons why it might be best to stay away from Aurora Cannabis. First, despite its seemingly good position in the Canadian market, Aurora has yet to deliver consistently strong financial results. The company's strategy is clearly not working so far. Second, Aurora pursued an aggressive growth strategy in its early days, and the pot grower relied heavily on dilutive forms of financing such as convertible notes and warrants. This could lead to Aurora's outstanding share count ballooning in the future, thus diluting existing shares. 

Furthermore, thanks to a boatload of expensive acquisitions, Aurora's balance sheet has about $2.4 billion in goodwill. This much goodwill on the company's balance sheet could lead to writedowns in the future, which could have a negative effect on Aurora's bottom line. Note that Aurora recently announced a writedown of goodwill "in the range of CA$740 million to CA$775 million." However, this could only be the beginning.

The verdict

Given the troubles it has encountered over the past six months or so, Aurora is probably best avoided at the moment. This is especially true given the company's share dilution problems, as well as the abnormal amount of goodwill on its balance sheet -- problems that will keep plaguing Aurora for a while. Sure, the company could benefit from a more favorable retail environment in Canada, and from the cannabis derivative market, but until Aurora manages to deliver consistently good financial results, it isn't worth buying its shares.