The Green Organic Dutchman Holdings Ltd.’s (TSE:TGOD) Shift From Loss To Profit

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The Green Organic Dutchman Holdings Ltd.’s (TSE:TGOD): The Green Organic Dutchman Holdings Ltd., through its subsidiary, The Green Organic Dutchman Ltd., operates as a cannabinoid-based research and development company in Canada. The CA$928m market-cap posted a loss in its most recent financial year of -CA$45.2m and a latest trailing-twelve-month loss of -CA$51.9m leading to an even wider gap between loss and breakeven. The most pressing concern for investors is TGOD’s path to profitability – when will it breakeven? Below I will provide a high-level summary of the industry analysts’ expectations for TGOD.

View our latest analysis for Green Organic Dutchman Holdings

TGOD is bordering on breakeven, according to the 6 Pharmaceuticals analysts. They anticipate the company to incur a final loss in 2019, before generating positive profits of CA$46m in 2020. So, TGOD is predicted to breakeven approximately a couple of months from now! In order to meet this breakeven date, I calculated the rate at which TGOD must grow year-on-year. It turns out an average annual growth rate of 104% is expected, which signals high confidence from analysts. Should the business grow at a slower rate, it will become profitable at a later date than expected.

TSX:TGOD Past and Future Earnings, July 8th 2019
TSX:TGOD Past and Future Earnings, July 8th 2019

Underlying developments driving TGOD’s growth isn’t the focus of this broad overview, but, keep in mind that by and large 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. TGOD has managed its capital prudently, with debt making up 0.1% of equity. This means that TGOD 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 TGOD, so if you are interested in understanding the company at a deeper level, take a look at TGOD’s company page on Simply Wall St. I’ve also compiled a list of essential aspects you should look at:

  1. Valuation: What is TGOD 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 TGOD 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 Green Organic Dutchman Holdings’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.