Stock Analysis

Salona Global Medical Device Corporation (CVE:SGMD): Are Analysts Optimistic?

TSXV:EVMT
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With the business potentially at an important milestone, we thought we'd take a closer look at Salona Global Medical Device Corporation's (CVE:SGMD) future prospects. Salona Global Medical Device Corporation provides lending and credit to the healthcare industry in the United States. The company’s loss has recently broadened since it announced a CA$2.7m loss in the full financial year, compared to the latest trailing-twelve-month loss of CA$5.1m, moving it further away from breakeven. As path to profitability is the topic on Salona Global Medical Device'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.

See our latest analysis for Salona Global Medical Device

Expectations from some of the Canadian Medical Equipment analysts is that Salona Global Medical Device is on the verge of breakeven. They anticipate the company to incur a final loss in 2022, before generating positive profits of CA$3.2m in 2023. 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 109%, which signals high confidence from analysts. If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.

earnings-per-share-growth
TSXV:SGMD Earnings Per Share Growth January 26th 2022

Underlying developments driving Salona Global Medical Device's growth isn’t the focus of this broad overview, but, keep in mind that by and large a high forecast growth rate is not unusual for a company that is currently undergoing an investment period.

One thing we would like to bring into light with Salona Global Medical Device is its relatively high level of debt. Generally, the rule of thumb is debt shouldn’t exceed 40% of your equity, which in Salona Global Medical Device's case is 58%. Note that a higher debt obligation increases the risk in investing in the loss-making company.

Next Steps:

There are too many aspects of Salona Global Medical Device to cover in one brief article, but the key fundamentals for the company can all be found in one place – Salona Global Medical Device's company page on Simply Wall St. We've also put together a list of relevant aspects you should look at:

  1. Historical Track Record: What has Salona Global Medical Device'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 Salona Global Medical Device'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.