Mighty Craft Limited (ASX:MCL): Is Breakeven Near?

With the business potentially at an important milestone, we thought we'd take a closer look at Mighty Craft Limited's (ASX:MCL) future prospects. Mighty Craft Limited acquires and operates various breweries, distilleries, bars, and restaurants in Australia. The AU$97m market-cap company announced a latest loss of AU$15m on 30 June 2021 for its most recent financial year result. Many investors are wondering about the rate at which Mighty Craft will turn a profit, with the big question being “when will the company breakeven?” In this article, we will touch on the expectations for the company's growth and when analysts expect it to become profitable.

View our latest analysis for Mighty Craft

Mighty Craft is bordering on breakeven, according to some Australian Hospitality analysts. They expect the company to post a final loss in 2022, before turning a profit of AU$3.7m in 2023. Therefore, the company is expected to breakeven roughly 2 years from today. What rate will the company have to grow year-on-year in order to breakeven on this date? Using a line of best fit, we calculated an average annual growth rate of 108%, which is rather optimistic! If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.

Underlying developments driving Mighty Craft's growth isn’t the focus of this broad overview, however, take into account that by and large a high forecast growth rate is not unusual for a company that is currently undergoing an investment period.

One thing we’d like to point out is that The company has managed its capital prudently, with debt making up 26% of equity. This means that it 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:

There are key fundamentals of Mighty Craft which are not covered in this article, but we must stress again that this is merely a basic overview. For a more comprehensive look at Mighty Craft, take a look at Mighty Craft's company page on Simply Wall St. We've also put together a list of essential aspects you should further examine:

1. Valuation: What is Mighty Craft 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 Mighty Craft 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 Mighty Craft’s board and the CEO’s background.
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.

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.

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