With the business potentially at an important milestone, we thought we'd take a closer look at KP Tissue Inc.'s (TSE:KPT) future prospects. KP Tissue Inc., through its interest in Kruger Products L.P., produces, distributes, markets, and sells a range of disposable tissue products in Canada and the United States. The CA$102m market-cap company posted a loss in its most recent financial year of CA$2.0m and a latest trailing-twelve-month loss of CA$3.6m leading to an even wider gap between loss and breakeven. As path to profitability is the topic on KP Tissue's investors mind, we've decided to gauge market sentiment. Below we will provide a high-level summary of the industry analysts’ expectations for the company.
KP Tissue is bordering on breakeven, according to the 6 Canadian Household Products analysts. They expect the company to post a final loss in 2020, before turning a profit of CA$30m in 2021. Therefore, the company is expected to breakeven roughly 12 months from now or less. At what rate will the company have to grow in order to realise the consensus estimates forecasting breakeven in under 12 months? Using a line of best fit, we calculated an average annual growth rate of 134%, which signals high confidence from analysts. Should the business grow at a slower rate, it will become profitable at a later date than expected.
Given this is a high-level overview, we won’t go into details of KP Tissue's upcoming projects, but, take into account that by and large a high forecast growth rate is not unusual for a company that is currently undergoing an investment period.
Before we wrap up, there’s one aspect worth mentioning. KP Tissue currently has no debt on its balance sheet, which is quite unusual for a cash-burning growth company, which typically has high debt relative to its equity. The company currently operates purely off its shareholder funding and has no debt obligation, reducing concerns around repayments and making it a less risky investment.
There are too many aspects of KP Tissue to cover in one brief article, but the key fundamentals for the company can all be found in one place – KP Tissue's company page on Simply Wall St. We've also put together a list of pertinent factors you should look at:
Valuation: What is KP Tissue 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 KP Tissue is currently mispriced by the market.
Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on KP Tissue’s board and the CEO’s background.
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.
This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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