Over the past year, Aurora Cannabis (ACB -11.71%) has been a rather disappointing stock, down about 30%. That's a far cry from the S&P 500's 46% rally during the same period. Investors hoping for signs of a turnaround were even more disappointed when they saw Aurora Cannabis's latest earnings report on May 13.

The stock fell by over 6% after the results were released. Does the earnings report condemn the stock for good, or is the post-earnings sell-off an opportunity to buy the pot giant on sale?

Scientist analyzing medical marijuana.

Image source: Getty Images.

A horrendous quarter 

During Aurora Cannabis' fiscal 2021 third quarter, which ended March 31, the company's revenue fell by 20.8% year over year to 55.2 million Canadian dollars. Simultaneously, its operating income less non-cash items (EBITDA) improved to negative CA$24 million, compared to negative CA$49.6 million a year ago. 

Even though its EBITDA loss tightened, the result was still below expectations. Last year, the firm forecast that it would generate positive EBITDA by its fiscal Q2 2021.

Aurora Cannabis currently has about CA$42.1 million worth of facilities idle as it winds down operations in the face of decreasing demand. A third wave of surging coronavirus cases in Canada also did not help the company's fortunes. The return of regional lockdowns and restrictions kept some consumers away from Aurora's products and made it more difficult to maintain efficient operations, dealing another blow to its bottom line. 

After accounting for depreciation and inventory writedowns, Aurora Cannabis posted a stunning gross loss of CA$72.4 million, compared to a gross profit of CA$22.9 million in Q3 2020. The company burned through CA$86.3 million worth of cash in the quarter, which was offset by equity sales worth CA$172.2 million.

That brings up another problem. Aurora Cannabis has CA$525 million worth of cash right now, compared to CA$481 million in debt. To make up for its losses, the company is planning yet another equity sale -- this one totaling $300 million -- to stay afloat. The number of shares outstanding has already increased to 197.98 million from less than 120 million a year ago.

Is there any hope left? 

Not all hope is lost for Aurora Cannabis. In the first three months of 2021, the firm became No. 1 in the Canadian medical marijuana market by sales volume. Revenues from its medical cannabis segment grew by 17% year over year to CA$36.4 million, including a 134% gain in international medical marijuana sales.  

Simultaneously, the company appears to have finally wound down operations enough to be in line with consumer demand. It sold 13,250 kilograms of dried cannabis during the quarter, which was down 11% from 15,253 kg in Q2. The number of kilograms sold was still up from 12,729 kilograms in Q3 2020. The company partially ascribes its jump from the year-prior period to increased international sales and an increased uptake of cannabis derivatives.

The company also announced a restructuring plan that it estimates will save it between CA$60 million and CA$80 million within the next 18 months. If we are to take Aurora Cannabis at its word this time, then the company will be on track to either break even or generate positive EBITDA by November 2022.

What's the verdict? 

I don't anticipate Aurora Cannabis turning its operations around before 2023. An end to pandemic-necessitated restrictions in Canada and the company's own restructuring efforts should all, eventually, pay off for Aurora Cannabis in terms of higher sales. And at its current valuation of just four times revenue, the stock would become dirt cheap if the company achieves any type of growth. 

However, until that turnaround happens, the combination of provincial lockdowns, unresolved legacy issues, and further share dilution will probably drive the stock price down even further. Bold long-term investors could consider buying the dip now. However, don't be surprised if the stock loses more ground before recovering and heading into higher territory than it occupies today.