Beleave Inc.’s (CNSX:BE) Path To Profitability

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Beleave Inc.’s (CNSX:BE): Beleave Inc. operates as a medical cannabis company in Canada. The CA$41m market-cap posted a loss in its most recent financial year of -CA$12.6m and a latest trailing-twelve-month loss of -CA$31.1m leading to an even wider gap between loss and breakeven. The most pressing concern for investors is BE’s path to profitability – when will it breakeven? I’ve put together a brief outline of industry analyst expectations for BE, its year of breakeven and its implied growth rate.

View our latest analysis for Beleave

BE is bordering on breakeven, according to Pharmaceuticals analysts. They expect the company to post a final loss in 2020, before turning a profit of CA$7.7m in 2021. So, BE is predicted to breakeven approximately 2 years from today. How fast will BE have to grow each year in order to reach the breakeven point by 2021? Working backwards from analyst estimates, it turns out that they expect the company to grow 59% year-on-year, on average, which is extremely buoyant. If this rate turns out to be too aggressive, BE may become profitable much later than analysts predict.

CNSX:BE Past and Future Earnings, June 20th 2019
CNSX:BE Past and Future Earnings, June 20th 2019

I’m not going to go through company-specific developments for BE given that this is a high-level summary, though, bear in mind that generally a pharma company has lumpy cash flows which are contingent on the drug and stage of product development the business is in. So, a high growth rate is not out of the ordinary, particularly when a company is in a period of investment.

Before I wrap up, there’s one aspect worth mentioning. BE has managed its capital prudently, with debt making up 31% of equity. This means that BE 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:

This article is not intended to be a comprehensive analysis on BE, so if you are interested in understanding the company at a deeper level, take a look at BE’s company page on Simply Wall St. I’ve also compiled a list of pertinent aspects you should further examine:

  1. Valuation: What is BE 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 BE 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 Beleave’s board and the CEO’s back ground.
  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.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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. Simply Wall St has no position in the stocks mentioned. Thank you for reading.