Yahoo Finance Loss-Making Cann Group Limited (ASX:CAN) Expected To Breakeven
Cann Group Limited's (ASX:CAN): Cann Group Limited engages in research and development, cultivation and production, manufacturing, clinical evaluation, and distribution/supply of medicinal cannabis for a range of diseases and medical conditions in Australia. The company’s loss has recently broadened since it announced a -AU$4.7m loss in the full financial year, compared to the latest trailing-twelve-month loss of -AU$8.2m, moving it further away from breakeven. Many investors are wondering the rate at which CAN will turn a profit, with the big question being “when will the company breakeven?” I’ve put together a brief outline of industry analyst expectations for CAN, its year of breakeven and its implied growth rate.
View our latest analysis for Cann Group
According to the industry analysts covering CAN, breakeven is near. They expect the company to post a final loss in 2020, before turning a profit of AU$11m in 2021. CAN is therefore projected to breakeven around 2 years from now. How fast will CAN have to grow each year in order to reach the breakeven point by 2021? Working backwards from analyst estimates, it turns out that they expect the company to grow 66% year-on-year, on average, which signals high confidence from analysts. Should the business grow at a slower rate, it will become profitable at a later date than expected.
Underlying developments driving CAN’s growth isn’t the focus of this broad overview, however, 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. This means that a high growth rate is not unusual, especially if the company is currently in an investment period.
Before I wrap up, there’s one aspect worth mentioning. CAN has managed its capital judiciously, with debt making up 0.02% of equity. This means that CAN 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:
This article is not intended to be a comprehensive analysis on CAN, so if you are interested in understanding the company at a deeper level, take a look at CAN’s company page on Simply Wall St. I’ve also put together a list of relevant aspects you should further examine:
Valuation: What is CAN 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 CAN 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 Cann Group’s board and the CEO’s back ground.
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.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
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. Thank you for reading.