Analysts Are Optimistic We'll See A Profit From Harvest Health & Recreation Inc. (CSE:HARV)

By
Simply Wall St
Published
June 08, 2021
Source: Shutterstock

We feel now is a pretty good time to analyse Harvest Health & Recreation Inc.'s (CSE:HARV) business as it appears the company may be on the cusp of a considerable accomplishment. Harvest Health and Recreation, Inc., together with its subsidiaries, cultivates, processes, sells, and retails inhalable, ingestible, and topical cannabis products in the United States. The company’s loss has recently broadened since it announced a US$58m loss in the full financial year, compared to the latest trailing-twelve-month loss of US$66m, moving it further away from breakeven. Many investors are wondering about the rate at which Harvest Health & Recreation 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 Harvest Health & Recreation

Consensus from 7 of the Canadian Pharmaceuticals analysts is that Harvest Health & Recreation is on the verge of breakeven. They anticipate the company to incur a final loss in 2020, before generating positive profits of US$10m in 2021. So, the company is predicted to breakeven approximately a year from now or less! We calculated the rate at which the company must grow to meet the consensus forecasts predicting breakeven within 12 months. It turns out an average annual growth rate of 63% is expected, which is extremely buoyant. Should the business grow at a slower rate, it will become profitable at a later date than expected.

earnings-per-share-growth
CNSX:HARV Earnings Per Share Growth June 8th 2021

Given this is a high-level overview, we won’t go into details of Harvest Health & Recreation's upcoming projects, though, keep in mind that by and large pharmaceuticals, depending on the stage of product development, have irregular periods of cash flow. So, a high growth rate is not out of the ordinary, particularly when a company is in a period of investment.

Before we wrap up, there’s one issue worth mentioning. Harvest Health & Recreation currently has a relatively high level of debt. Generally, the rule of thumb is debt shouldn’t exceed 40% of your equity, which in Harvest Health & Recreation's case is 73%. A higher level of debt requires more stringent capital management which increases the risk in investing in the loss-making company.

Next Steps:

There are key fundamentals of Harvest Health & Recreation 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 Harvest Health & Recreation, take a look at Harvest Health & Recreation's company page on Simply Wall St. We've also put together a list of important aspects you should further examine:

  1. Valuation: What is Harvest Health & Recreation 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 Harvest Health & Recreation 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 Harvest Health & Recreation’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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