Founded in 2017, Aurora Innovation, Inc. (AUR - Get Rating) in Pittsburgh, Pa., is a self-driving technology company. On Nov. 4, 2021, the company went public through a reverse merger with special purpose acquisition company Reinvent Technology Partners. AUR raised $2.50 billion in cash through the reverse merger, valuing the company at $11 billion.

AUR co-founder and CEO Chris Urmson said, “This will unlock the capital we need to deliver the Aurora driver as a service at scale.”

However, shares of AUR have declined 59.2% in price since its stock market debut. In addition, the stock has declined 66.2% year-to-date and 16.4% over the past month.

Here is what could shape AUR’s performance in the near term:

Poor Financials

AUR’s collaboration revenue came in at $42 million in its fiscal 2022 first quarter, ended March 31, 2022. However, its loss from operations stood at $143.14 million, while its net loss amounted to $76.81 million. Its loss per share came in at $0.07, and its adjusted EBITDA loss amounted to $108.11 million.

Its net operating cash outflow was  $135.81 million in the last quarter. Cash and cash equivalents slumped 41.5% year-over-year to $520.69 million. Its net investing cash outflow stood at $971.58 million, compared to a $291.06 million cash outflow in the prior-year quarter.

Poor Growth Prospects

Analysts expect AUR’s revenues to be  $48.62 million in its fiscal year 2022 (ending Dec. 31, 2022), indicating a 41.1% decline year-over-year. In addition, the $2.80 million consensus revenue estimate for its fiscal year 2023 indicates a 94.2% decline from the same period last year.

Also, the Street expects AUR’s EPS to remain negative until at least fiscal 2023. Furthermore, the negative $0.87 consensus EPS estimate for fiscal 2023 indicates an 8.7% slump year-over-year.

Frothy Valuation

In terms of forward Price/Sales, AUR is currently trading at 93.63x, which is 7281.4% higher than the 1.27x industry average. In addition, the stock’s 65.48 forward EV/Sales multiple  is 4061.1% higher than the 1.57 industry average.

 AUR’s EV/EBITDA ratio is negative 3.68. But the stock’s 1.32  trailing-12-month Price/Book multiple is 45.1% lower than the 2.41 industry average.

POWR Ratings Reflect Bleak Prospects

AUR has an overall F rating, which translates to Strong Sell in our proprietary POWR Ratings system. The POWR Ratings are calculated by considering 118 distinct factors, with each factor weighted to an optimal degree.

AUR has an F grade for Value and D for Quality. The stock’s negative EV/EBITDA is in sync with the Value grade. In addition, AUR’s trailing-12-month ROE of negative 33.75% justifies the Quality grade.

Of the 79 stocks in the C-rated Technology – Services industry, AUR is ranked #76.

Beyond what I have stated above, view AUR ratings for Growth, Sentiment, Stability, and Momentum here.

Bottom Line

AUR plans to debut its autonomous technology in Volvo and Paccar 8 trucks by late 2023. It is also partnered with Uber (UBER) and Toyota (TM). The company is currently developing level 4 autonomous driving technology, in which human interaction is not needed. However, it might take some time for AUR to generate revenues from this technology. Because UR’s primary products and services are still under development, we think the stock is best avoided now.

How Does Aurora Innovation (AUR) Stack Up Against its Peers?

While AUR has an F rating in our proprietary rating system, one might want to consider looking at its industry peers, Fujitsu Limited (FJTSY - Get Rating), Information Services Group, Inc. (III - Get Rating), and Celestica, Inc. (CLS - Get Rating), which have an A (Strong Buy) rating.

Note that III is one of the few stocks handpicked by our Chief Growth Strategist, Jaimini Desai, currently in the POWR Stocks Under $10 portfolio. Learn more here.

AUR shares were trading at $3.89 per share on Monday morning, up $0.02 (+0.52%). Year-to-date, AUR has declined -65.45%, versus a -15.67% rise in the benchmark S&P 500 index during the same period.

About the Author: Aditi Ganguly

Aditi is an experienced content developer and financial writer who is passionate about helping investors understand the do’s and don'ts of investing. She has a keen interest in the stock market and has a fundamental approach when analyzing equities. More...

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