Yahoo Finance When Will Cann Group Limited (ASX:CAN) Become Profitable?
Cann Group Limited's (ASX:CAN): Cann Group Limited engages in research and development, cultivation and production, manufacturing, clinical evaluation, processing, packaging, and distribution/supply of medicinal cannabis for a range of diseases and medical conditions in Australia. With the latest financial year loss of -AU$10.9m and a trailing-twelve month of -AU$14.4m, the AU$90m market-cap amplifies its loss by moving further away from its breakeven target. The most pressing concern for investors is CAN’s path to profitability – when will it breakeven? Below I will provide a high-level summary of the industry analysts’ expectations for CAN.
Check out our latest analysis for Cann Group
CAN is bordering on breakeven, according to the 2 Pharmaceuticals analysts. They expect the company to post a final loss in 2021, before turning a profit of AU$7.5m in 2022. 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 2022? Working backwards from analyst estimates, it turns out that they expect the company to grow 68% year-on-year, on average, which is rather optimistic! If this rate turns out to be too aggressive, CAN may become profitable much later than analysts predict.
Underlying developments driving CAN’s growth isn’t the focus of this broad overview, however, take into account that by and large a pharma company has lumpy cash flows which are contingent on the drug and stage of product development the business is in. This means, large upcoming growth rates are not abnormal as the company is beginning to reap the benefits of earlier investments.
One thing I’d like to point out is that CAN has no debt on its balance sheet, which is rare for a loss-making pharma, which typically has high debt relative to its equity. CAN currently operates purely off its shareholder funding and has no debt obligation, reducing concerns around repayments and making it a less risky investment.
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 key factors 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.
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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