We feel now is a pretty good time to analyse Bubs Australia Limited's (ASX:BUB) business as it appears the company may be on the cusp of a considerable accomplishment. Bubs Australia Limited, together with its subsidiaries, engages in the production and sale of various infant nutrition products in Australia, China, and internationally. On 30 June 2020, the AU$374m market-cap company posted a loss of AU$7.8m for its most recent financial year. 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?” We've put together a brief outline of industry analyst expectations for the company, its year of breakeven and its implied growth rate.
Bubs Australia is bordering on breakeven, according to the 3 Australian Food analysts. They expect the company to post a final loss in 2022, before turning a profit of AU$7.2m in 2023. 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 2023? Working backwards from analyst estimates, it turns out that they expect the company to grow 55% year-on-year, on average, which is rather optimistic! If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.
We're not going to go through company-specific developments for Bubs Australia given that this is a high-level summary, though, bear in mind that typically 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 1.5% 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.
There are too many aspects of Bubs Australia to cover in one brief article, but the key fundamentals for the company can all be found in one place – Bubs Australia's company page on Simply Wall St. We've also compiled a list of pertinent aspects you should further examine:
- 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.
- 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.
- 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. 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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