The Flowr Corporation's (CVE:FLWR): The Flowr Corporation cultivates, produces, and sells cannabis in Canada. With the latest financial year loss of -CA$15.4m and a trailing-twelve month of -CA$14.0m, the CA$66m market-cap alleviates its loss by moving closer towards its target of breakeven. As path to profitability is the topic on FLWR’s investors mind, I’ve decided to gauge market sentiment. Below I will provide a high-level summary of the industry analysts’ expectations for FLWR.
Check out our latest analysis for Flowr
According to the 3 industry analysts covering FLWR, the consensus is breakeven is near. They expect the company to post a final loss in 2020, before turning a profit of CA$4.5m in 2021. Therefore, FLWR is expected to breakeven roughly a couple of months from now! What rate will FLWR 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 59%, which is extremely buoyant. If this rate turns out to be too aggressive, FLWR may become profitable much later than analysts predict.
I’m not going to go through company-specific developments for FLWR given that this is a high-level summary, but, keep 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 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. FLWR has managed its capital prudently, with debt making up 8.3% of equity. This means that FLWR 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 FLWR, so if you are interested in understanding the company at a deeper level, take a look at FLWR’s company page on Simply Wall St. I’ve also put together a list of relevant factors you should look at:
- Valuation: What is FLWR 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 FLWR 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 Flowr’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.
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.
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