When Can We Expect A Profit From Ascend Wellness Holdings, Inc. (CSE:AAWH.U)?

With the business potentially at an important milestone, we thought we'd take a closer look at Ascend Wellness Holdings, Inc.'s (CSE:AAWH.U) future prospects. Ascend Wellness Holdings, Inc. engages in the cultivation, manufacture, and distribution of cannabis consumer packaged goods in the United States. The US$88m market-cap company posted a loss in its most recent financial year of US$48m and a latest trailing-twelve-month loss of US$88m leading to an even wider gap between loss and breakeven. Many investors are wondering about the rate at which Ascend Wellness Holdings will turn a profit, with the big question being “when will the company breakeven?” In this article, we will touch on the expectations for the company's growth and when analysts expect it to become profitable.

View our latest analysis for Ascend Wellness Holdings

Consensus from 7 of the Canadian Personal Products analysts is that Ascend Wellness Holdings is on the verge of breakeven. They anticipate the company to incur a final loss in 2025, before generating positive profits of US$19m in 2026. 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 74%, 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.

Underlying developments driving Ascend Wellness Holdings' growth isn’t the focus of this broad overview, 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 issue worth mentioning. Ascend Wellness Holdings currently has a debt-to-equity ratio of over 2x. 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:

This article is not intended to be a comprehensive analysis on Ascend Wellness Holdings, so if you are interested in understanding the company at a deeper level, take a look at Ascend Wellness Holdings' company page on Simply Wall St. We've also put together a list of pertinent factors you should further research:

1. Valuation: What is Ascend Wellness Holdings 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 Ascend Wellness Holdings 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 Ascend Wellness Holdings’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.