Yahoo Finance ECS Botanics Holdings Ltd (ASX:ECS): When Will It Breakeven?
ECS Botanics Holdings Ltd (ASX:ECS) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. ECS Botanics Holdings Ltd engages in the cultivation, manufacture, and sale of medicinal cannabis products. The AU$30m market-cap company posted a loss in its most recent financial year of AU$4.3m and a latest trailing-twelve-month loss of AU$4.0m shrinking the gap between loss and breakeven. Many investors are wondering about the rate at which ECS Botanics Holdings will turn a profit, with the big question being “when will the company breakeven?” Below we will provide a high-level summary of the industry analysts’ expectations for the company.
Check out our latest analysis for ECS Botanics Holdings
Expectations from some of the Australian Pharmaceuticals analysts is that ECS Botanics Holdings is on the verge of breakeven. They expect the company to post a final loss in 2023, before turning a profit of AU$3.2m in 2024. Therefore, the company is expected to breakeven roughly 2 years from today. How fast will the company have to grow each year in order to reach the breakeven point by 2024? Working backwards from analyst estimates, it turns out that they expect the company to grow 120% year-on-year, on average, which is extremely buoyant. If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.
Underlying developments driving ECS Botanics Holdings' growth isn’t the focus of this broad overview, though, bear 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.
One thing we’d like to point out is that ECS Botanics Holdings has no debt on its balance sheet, which is quite unusual for a cash-burning pharma, 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.
Next Steps:
There are too many aspects of ECS Botanics Holdings to cover in one brief article, but the key fundamentals for the company can all be found in one place – ECS Botanics Holdings' company page on Simply Wall St. We've also put together a list of essential aspects you should further examine:
Historical Track Record: What has ECS Botanics Holdings' performance been like over the past? Go into more detail in the past track record analysis and take a look at the free visual representations of our analysis for more clarity.
Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on ECS Botanics Holdings' 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.
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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.
