SunOpta Inc.'s (TSE:SOY) Profit Outlook

SunOpta Inc. (TSE:SOY) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. SunOpta Inc. manufactures and sells plant-based and fruit-based food and beverage products to retail customers, foodservice distributors, branded food companies, and food manufacturers; and sources and produces organic and non-genetically modified (non-GMO) ingredients for food industry worldwide. The company’s loss has recently broadened since it announced a US$8.8m loss in the full financial year, compared to the latest trailing-twelve-month loss of US$11m, moving it further away from breakeven. The most pressing concern for investors is SunOpta's path to profitability – when will it breakeven? We've put together a brief outline of industry analyst expectations for the company, its year of breakeven and its implied growth rate.

View our latest analysis for SunOpta

According to the 3 industry analysts covering SunOpta, the consensus is that breakeven is near. They anticipate the company to incur a final loss in 2020, before generating positive profits of US$13m in 2021. Therefore, the company is expected to breakeven just over a year from now. In order to meet this breakeven date, we calculated the rate at which the company must grow year-on-year. It turns out an average annual growth rate of 51% is expected, which signals high confidence from analysts. Should the business grow at a slower rate, it will become profitable at a later date than expected.

Underlying developments driving SunOpta'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.

Before we wrap up, there’s one issue worth mentioning. SunOpta currently has a debt-to-equity ratio of 172%. Typically, debt shouldn’t exceed 40% of your equity, which in this case, the company has significantly overshot. Note that a higher debt obligation increases the risk around investing in the loss-making company.

Next Steps:

There are key fundamentals of SunOpta 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 SunOpta, take a look at SunOpta's company page on Simply Wall St. We've also put together a list of key factors you should look at:

1. Valuation: What is SunOpta 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 SunOpta 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 SunOpta’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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