Beleave Inc. (CNSX:BE): Is Breakeven Near?

Simply Wall St - finance.yahoo.com Posted 5 years ago
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Beleave Inc.’s (CNSX:BE): Beleave Inc. operates as a medical cannabis company in Canada. The CA$43m market-cap posted a loss in its most recent financial year of -CA$12.6m and a latest trailing-twelve-month loss of -CA$31.1m leading to an even wider gap between loss and breakeven. As path to profitability is the topic on BE’s investors mind, I’ve decided to gauge market sentiment. In this article, I will touch on the expectations for BE’s growth and when analysts expect the company to become profitable.

See our latest analysis for Beleave

According to the industry analysts covering BE, breakeven is near. They expect the company to post a final loss in 2020, before turning a profit of CA$7.7m in 2021. Therefore, BE is expected to breakeven roughly 2 years from today. What rate will BE have to grow year-on-year in order to breakeven on this date? Using a line of best fit, I calculated an average annual growth rate of 73%, which is rather optimistic! If this rate turns out to be too aggressive, BE may become profitable much later than analysts predict.

CNSX:BE Past and Future Earnings, March 18th 2019
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Underlying developments driving BE’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.

One thing I’d like to point out is that BE has managed its capital prudently, with debt making up 31% of equity. This means that BE 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 BE, so if you are interested in understanding the company at a deeper level, take a look at BE’s company page on Simply Wall St. I’ve also put together a list of essential factors you should further research:

  1. Valuation: What is BE 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 BE 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 Beleave’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.

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 [email protected]. 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.