Emblem Corp’s (CVE:EMC): Emblem Corp. produces, distributes, and sells medical cannabis and cannabis derivatives in Canada. The company’s loss has recently broadened since it announced a -CA$12.10m loss in the full financial year, compared to the latest trailing-twelve-month loss of -CA$13.44m, moving it further away from breakeven. The most pressing concern for investors is EMC’s path to profitability – when will it breakeven? Below I will provide a high-level summary of the industry analysts’ expectations for EMC.
Expectation from Pharmaceuticals analysts is EMC is on the verge of breakeven. They anticipate the company to incur a final loss in 2019, before generating positive profits of CA$10.03m in 2020. Therefore, EMC is expected to breakeven roughly a few months from now. What rate will EMC have to grow year-on-year in order to breakeven on this date? Using a line of best fit, I calculated an average annual growth rate of 98.23%, which is rather optimistic! If this rate turns out to be too aggressive, EMC may become profitable much later than analysts predict.
Given this is a high-level overview, I won’t go into details of EMC’s upcoming projects, though, keep in mind that typically a pharma company has lumpy cash flows which are contingent on the drug and stage of product development the business is in. This means that a high growth rate is not unusual, especially if the company is currently in an investment period.
Before I wrap up, there’s one aspect worth mentioning. EMC has managed its capital judiciously, with debt making up 25.29% of equity. This means that EMC has predominantly funded its operations from equity capital,and its low debt obligation reduces the risk around investing in the loss-making company.
This article is not intended to be a comprehensive analysis on EMC, so if you are interested in understanding the company at a deeper level, take a look at EMC’s company page on Simply Wall St. I’ve also compiled a list of relevant aspects you should look at:
- Valuation: What is EMC 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 EMC is currently mispriced by the market.
- Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Emblem’s board and the CEO’s back ground.
- 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.
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at firstname.lastname@example.org.