Shares of Aurora Cannabis (NYSE:ACB) have been trading wildly since the cannabis producer released its third-quarter results May 14. The report was an encouraging one for investors, as Aurora made progress in sales and in bringing down its expenses from the previous quarter. But that doesn't mean there are no problems or concerns moving forward. Let's take a closer look at how the pot company did in its most recent period and assess whether it's worth buying today.

The bar was easy to clear after a disastrous second quarter

Aurora's second-quarter results, released Feb. 13, were abysmal. Its revenue of 56 million Canadian dollars during the quarter was only a 3.4% improvement from the prior-year period. Meanwhile, with impairment and other expenses of more than CA$1.2 billion, the Edmonton, Alberta-based company had its worst performance ever, incurring a net loss of CA$1.3 billion.

Aurora also said in February that for the then-upcoming third quarter, it was expecting "modest to no growth" over the troubled Q2 performance. That was one of the reasons I was optimistic the company could have a much better Q3, and that it was possibly sandbagging expectations. And indeed, with CA$75.5 million in net revenue during Q3, Aurora showed a lot more than just modest growth. Sales were up 35% from Q2 and 16% from the prior-year period.

Cannabis plant.

Image source: Getty Images.

A net loss of CA$137.4 million looked a whole lot better than the massive loss that the company reported in Q2. It was also an improvement from the CA$160.2 million loss Aurora incurred in the third quarter of fiscal 2019.

But compared against a better quarter, such as the first quarter of fiscal 2020, the Q3 results don't look nearly as impressive anymore. Sales are flat from Q1, when Aurora recorded CA$75.2 million in revenue; unrealized gains even helped the company record a profit of CA$10.4 million back then.

With a much weaker performance in Q2 than in Q1, it was a whole lot easier for the company to impress investors in Q3. And while Aurora did make improvements from the previous quarter, investors should be careful not to get too carried away with the results, as there are still concerns moving forward.

Why the report still wasn't all that impressive

Aurora's consumer cannabis net revenue was the driving force behind the improved numbers in Q3. At CA$38.6 million, it was up 68% from Q2. Net medical marijuana sales of CA$31.1 million rose by a more modest 14% during the same period.

But putting all that into context tells a bit of a different story. Aurora earned an extra CA$15.6 million in recreational sales during Q3. The company's management discussion and analysis (MD&A) noted that the biggest reason for the improvement was a CA$7.6 million reduction in net returns and adjustments. There was only a CA$4.2 million increase due to higher volume, which management noted was mainly thanks to its new Daily Special value brand. And while the brand's lower prices will make it more competitive with the black market, they won't do Aurora's margins any favors.

Finally, sales of higher-margin cannabis 2.0 products were up just CA$2.8 million during the quarter. After peeling back the onion, Aurora's sales growth this past quarter isn't nearly as impressive as it looked at first glance, as the gains are largely due to fewer returns and growth in low-margin products.

Another area of concern for the company continues to be its cash flow. In Q3, Aurora burned through CA$58.7 million in cash from its operating activities -- more than the prior year's CA$54.7 million. This also compares favorably against Q2's wretched results, when Aurora burned through CA$134.7 million from its operations.

Aurora still isn't a buy

Although the company did show improvement from Q2, that's not nearly enough to make the pot stock a good buy today. Aurora still has many challenges ahead, especially with a recession looming in Canada due to COVID-19 which may affect the strength of the cannabis industry in future quarters. With CA$230.2 million in cash on its books as of March 31, Aurora's in decent shape if it can continue to maintain its current level of cash burn, but there's no guarantee that will be the case.

Over the past 12 months, shares of Aurora are down more than 80%, far worse than the Horizons Marijuana Life Sciences ETF (OTC:HMLS.F), which is down 65% during the same period.

This is a company that's disappointed investors all too often in the past with underwhelming results. Before investors consider taking a chance here, they should wait for at least another quarter or two to see how it's performing amid COVID-19 and whether there's continued improvement in its financials.