When Will Organic Garage Ltd. (CVE:OG) Turn A Profit?

With the business potentially at an important milestone, we thought we'd take a closer look at Organic Garage Ltd.'s (CVE:OG) future prospects. Organic Garage Ltd. owns and operates grocery stores that sell natural and organic products to consumers in Canada. With the latest financial year loss of CA$5.1m and a trailing-twelve-month loss of CA$3.1m, the CA$27m market-cap company alleviated its loss by moving closer towards its target of breakeven. As path to profitability is the topic on Organic Garage's investors mind, we've decided to gauge market sentiment. We've put together a brief outline of industry analyst expectations for the company, its year of breakeven and its implied growth rate.

Check out our latest analysis for Organic Garage

Expectations from some of the Canadian Consumer Retailing analysts is that Organic Garage is on the verge of breakeven. They anticipate the company to incur a final loss in 2021, before generating positive profits of CA$1.2m in 2022. The company is therefore projected to breakeven just over a year 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 191%, which is extremely buoyant. 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 Organic Garage's upcoming projects, though, bear 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 issue worth mentioning. Organic Garage currently has a relatively high level of debt. Generally, the rule of thumb is debt shouldn’t exceed 40% of your equity, which in Organic Garage's case is 95%. Note that a higher debt obligation increases the risk in investing in the loss-making company.

Next Steps:

There are key fundamentals of Organic Garage 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 Organic Garage, take a look at Organic Garage's company page on Simply Wall St. We've also compiled a list of pertinent aspects you should further examine:

1. Valuation: What is Organic Garage 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 Organic Garage 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 Organic Garage’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. 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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