Analysts Are Optimistic We'll See A Profit From Indus Holdings, Inc. (CSE:INDS)

We feel now is a pretty good time to analyse Indus Holdings, Inc.'s (CSE:INDS) business as it appears the company may be on the cusp of a considerable accomplishment. Indus Holdings, Inc. cultivates, extracts, manufactures, markets, distributes, and sells cannabis products in California. With the latest financial year loss of US$51m and a trailing-twelve-month loss of US$25m, the CA$85m market-cap company alleviated its loss by moving closer towards its target of breakeven. Many investors are wondering about the rate at which Indus Holdings will turn a profit, with the big question being “when will the company breakeven?” Below we will provide a high-level summary of the industry analysts’ expectations for the company.

Check out our latest analysis for Indus Holdings

According to the 2 industry analysts covering Indus Holdings, the consensus is that breakeven is near. They anticipate the company to incur a final loss in 2020, before generating positive profits of US$7.5m in 2021. So, the company is predicted to breakeven approximately 12 months from now or less. At what rate will the company have to grow in order to realise the consensus estimates forecasting breakeven in under 12 months? Using a line of best fit, we calculated an average annual growth rate of 170%, which is rather optimistic! Should the business grow at a slower rate, it will become profitable at a later date than expected.

Given this is a high-level overview, we won’t go into details of Indus Holdings' upcoming projects, but, 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. This means, large upcoming growth rates are not abnormal as the company is beginning to reap the benefits of earlier investments.

Before we wrap up, there’s one issue worth mentioning. Indus Holdings currently has a relatively high level of debt. Typically, debt shouldn’t exceed 40% of your equity, which in Indus Holdings' case is 72%. A higher level of debt requires more stringent capital management which increases the risk around investing in the loss-making company.

Next Steps:

There are key fundamentals of Indus Holdings 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 Indus Holdings, take a look at Indus Holdings' company page on Simply Wall St. We've also compiled a list of pertinent factors you should look at:

1. Historical Track Record: What has Indus Holdings' 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 Indus Holdings' 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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