Bubs Australia Limited (ASX:BUB) Is Expected To Breakeven In The Near Future

Bubs Australia Limited (ASX:BUB) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. Bubs Australia Limited, together with its subsidiaries, engages in the manufacture and sale of various infant nutrition and wellbeing products in Australia, China, the United States, and internationally. The AU$112m market-cap company posted a loss in its most recent financial year of AU$21m and a latest trailing-twelve-month loss of AU$9.8m shrinking the gap between loss and breakeven. Many investors are wondering about the rate at which Bubs Australia 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 Bubs Australia

Bubs Australia is bordering on breakeven, according to the 2 Australian Food analysts. They anticipate the company to incur a final loss in 2025, before generating positive profits of AU$5.3m in 2026. The company is therefore projected to breakeven just over a year from today. How fast will the company have to grow each year in order to reach the breakeven point by 2026? Working backwards from analyst estimates, it turns out that they expect the company to grow 114% year-on-year, on average, which signals high confidence from analysts. Should the business grow at a slower rate, it will become profitable at a later date than expected.

Given this is a high-level overview, we won’t go into details of Bubs Australia's upcoming projects, however, keep in mind that generally a high growth rate is not out of the ordinary, particularly when a company is in a period of investment.

Before we wrap up, there’s one aspect worth mentioning. The company has managed its capital prudently, with debt making up 13% 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:

This article is not intended to be a comprehensive analysis on Bubs Australia, so if you are interested in understanding the company at a deeper level, take a look at Bubs Australia's company page on Simply Wall St. We've also put together a list of relevant aspects you should look at:

1. Valuation: What is Bubs Australia 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 Bubs Australia 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 Bubs Australia’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.

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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.