The Supreme Cannabis Company, Inc. (TSE:FIRE) Is About To Turn The Corner

By
Simply Wall St
Published
February 03, 2021
TSX:FIRE

The Supreme Cannabis Company, Inc. (TSE:FIRE) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. The Supreme Cannabis Company, Inc. engages in the production of medical cannabis products in Canada. The CA$124m market-cap company posted a loss in its most recent financial year of CA$139m and a latest trailing-twelve-month loss of CA$93m shrinking the gap between loss and breakeven. Many investors are wondering about the rate at which Supreme Cannabis Company will turn a profit, with the big question being “when will the company breakeven?” We've put together a brief outline of industry analyst expectations for the company, its year of breakeven and its implied growth rate.

Check out our latest analysis for Supreme Cannabis Company

Supreme Cannabis Company is bordering on breakeven, according to the 3 Canadian Pharmaceuticals analysts. They anticipate the company to incur a final loss in 2020, before generating positive profits of CA$20m in 2021. So, the company is predicted to breakeven approximately a year from now or less! How fast will the company have to grow to reach the consensus forecasts that anticipate breakeven by 2021? Working backwards from analyst estimates, it turns out that they expect the company to grow 78% year-on-year, on average, 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
TSX:FIRE Earnings Per Share Growth February 4th 2021

Given this is a high-level overview, we won’t go into details of Supreme Cannabis Company's upcoming projects, however, take into account that typically pharmaceuticals, depending on the stage of product development, have irregular periods of cash flow. This means, large upcoming growth rates are not abnormal as the company is beginning to reap the benefits of earlier investments.

One thing we would like to bring into light with Supreme Cannabis Company is its relatively high level of debt. Generally, the rule of thumb is debt shouldn’t exceed 40% of your equity, which in Supreme Cannabis Company's case is 41%. Note that a higher debt obligation increases the risk around investing in the loss-making company.

Next Steps:

There are key fundamentals of Supreme Cannabis Company 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 Supreme Cannabis Company, take a look at Supreme Cannabis Company's company page on Simply Wall St. We've also compiled a list of relevant aspects you should further research:

  1. Historical Track Record: What has Supreme Cannabis Company's 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 Supreme Cannabis Company'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. 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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