When Will Bubs Australia Limited (ASX:BUB) Breakeven?

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, the United States, and internationally. The AU$116m market-cap company announced a latest loss of AU$108m on 30 June 2023 for its most recent financial year result. 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.

See our latest analysis for Bubs Australia

Consensus from 2 of the Australian Food analysts is that Bubs Australia is on the verge of breakeven. They anticipate the company to incur a final loss in 2025, before generating positive profits of AU$1.5m in 2026. Therefore, the company is expected to breakeven roughly 2 years from now. 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 110%, which is rather optimistic! If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.

Given this is a high-level overview, we won’t go into details of Bubs Australia's upcoming projects, though, keep in mind that typically a high forecast growth rate is not unusual for a company that is currently undergoing an investment period.

Before we wrap up, there’s one aspect worth mentioning. The company has managed its capital prudently, with debt making up 4.8% 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 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 put together a list of relevant factors you should further examine:

1. Historical Track Record: What has Bubs Australia'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.
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.