Indiva Limited's (CVE:NDVA) Shift From Loss To Profit

Indiva Limited's (CVE:NDVA): Indiva Limited produces medical grade cannabis in Canada. The company’s loss has recently broadened since it announced a -CA$8.5m loss in the full financial year, compared to the latest trailing-twelve-month loss of -CA$11.1m, moving it further away from breakeven. The most pressing concern for investors is NDVA’s path to profitability – when will it breakeven? I’ve put together a brief outline of industry analyst expectations for NDVA, its year of breakeven and its implied growth rate.

View our latest analysis for Indiva

According to the industry analysts covering NDVA, breakeven is near. They anticipate the company to incur a final loss in 2021, before generating positive profits of CA$2.3m in 2022. Therefore, NDVA is expected to breakeven roughly 2 years from today. How fast will NDVA have to grow each year in order to reach the breakeven point by 2022? Working backwards from analyst estimates, it turns out that they expect the company to grow 57% year-on-year, on average, which is extremely buoyant. If this rate turns out to be too aggressive, NDVA may become profitable much later than analysts predict.

TSXV:NDVA Past and Future Earnings April 14th 2020

Underlying developments driving NDVA’s growth isn’t the focus of this broad overview, though, keep in mind that generally a pharma company has lumpy cash flows which are contingent on the drug and stage of product development the business is in. So, a high growth rate is not out of the ordinary, particularly when a company is in a period of investment.

Before I wrap up, there’s one aspect worth mentioning. NDVA has managed its capital prudently, with debt making up 23% of equity. This means that NDVA has predominantly funded its operations from equity capital,and its low debt obligation reduces the risk around investing in the loss-making company.

Next Steps:

There are key fundamentals of NDVA which are not covered in this article, but I must stress again that this is merely a basic overview. For a more comprehensive look at NDVA, take a look at NDVA’s company page on Simply Wall St. I’ve also put together a list of essential factors you should look at:

1. Valuation: What is NDVA worth today? Has the future growth potential already been factored into the price? The intrinsic value infographic in our free research report helps visualize whether NDVA is currently mispriced by the market.

2. Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Indiva’s board and the CEO’s back ground.

3. Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned.

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