TILT Holdings Inc.'s (CSE:TILT) Has Found A Path To Profitability

With the business potentially at an important milestone, we thought we'd take a closer look at TILT Holdings Inc.'s (CSE:TILT) future prospects. TILT Holdings Inc., a vertically-integrated technology and infrastructure company, provides various products and services across the cannabis industry in the United States, Canada, and Europe. With the latest financial year loss of US$133m and a trailing-twelve-month loss of US$46m, the CA$136m market-cap company alleviated its loss by moving closer towards its target of breakeven. As path to profitability is the topic on TILT Holdings' 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.

View our latest analysis for TILT Holdings

TILT Holdings is bordering on breakeven, according to the 2 Canadian Pharmaceuticals analysts. They expect the company to post a final loss in 2020, before turning a profit of US$7.4m in 2021. Therefore, the company is expected to breakeven roughly a year 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 144%, which is rather optimistic! Should the business grow at a slower rate, it will become profitable at a later date than expected.

We're not going to go through company-specific developments for TILT Holdings given that this is a high-level summary, though, bear in mind that by and large pharmaceuticals, depending on the stage of product development, have irregular periods of cash flow. This means that a high growth rate is not unusual, especially if the company is currently in an investment period.

Before we wrap up, there’s one aspect worth mentioning. The company has managed its capital prudently, with debt making up 18% of equity. This means that it 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:

There are key fundamentals of TILT 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 TILT Holdings, take a look at TILT Holdings' company page on Simply Wall St. We've also compiled a list of relevant aspects you should further examine:

1. Historical Track Record: What has TILT 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 TILT 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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