When Will 48North Cannabis Corp. (CVE:NRTH) Become Profitable?

September 02, 2019

48North Cannabis Corp.'s (CVE:NRTH): 48North Cannabis Corp. operates as a cannabis company in the female health and wellness market in Canada. The CA$135m market-cap company’s loss lessens since it announced a -CA$12.4m bottom-line in the full financial year, compared to the latest trailing-twelve-month loss of -CA$8.7m, as it approaches breakeven. The most pressing concern for investors is NRTH’s path to profitability – when will it breakeven? In this article, I will touch on the expectations for NRTH’s growth and when analysts expect the company to become profitable.

See our latest analysis for 48North Cannabis

According to the industry analysts covering NRTH, breakeven is near. They expect the company to post a final loss in 2020, before turning a profit of CA$7.9m in 2021. So, NRTH is predicted to breakeven approximately 2 years from now. How fast will NRTH 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 81% year-on-year, on average, which is rather optimistic! Should the business grow at a slower rate, it will become profitable at a later date than expected.

TSXV:NRTH Past and Future Earnings, September 2nd 2019

Given this is a high-level overview, I won’t go into details of NRTH’s upcoming projects, but, bear in mind that by and large pharmaceuticals, depending on the stage of product development, have irregular periods of cash flow. This means, large upcoming growth rates are not abnormal as the company is beginning to reap the benefits of earlier investments.

Before I wrap up, there’s one aspect worth mentioning. NRTH currently has no debt on its balance sheet, which is rare for a loss-making pharma, which typically has high debt relative to its equity. NRTH 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 key fundamentals of NRTH which are not covered in this article, but I must stress again that this is merely a basic overview. For a more comprehensive look at NRTH, take a look at NRTH’s company page on Simply Wall St. I’ve also compiled a list of relevant aspects you should further research:

Historical Track Record: What has NRTH's 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 48North Cannabis’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.