Benchmark Holdings plc's (LON:BMK) Path To Profitability

By
Simply Wall St
Published
July 04, 2019

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Benchmark Holdings plc's (LON:BMK): Benchmark Holdings plc, together with its subsidiaries, provides technical services, products, and specialist knowledge for the development of food and farming industries worldwide. The UK£307m market-cap posted a loss in its most recent financial year of -UK£5.0m and a latest trailing-twelve-month loss of -UK£18.0m leading to an even wider gap between loss and breakeven. Many investors are wondering the rate at which BMK will turn a profit, with the big question being “when will the company breakeven?” I’ve put together a brief outline of industry analyst expectations for BMK, its year of breakeven and its implied growth rate.

Check out our latest analysis for Benchmark Holdings

Consensus from the 3 Pharmaceuticals analysts is BMK is on the verge of breakeven. They expect the company to post a final loss in 2020, before turning a profit of UK£5.9m in 2021. BMK is therefore projected to breakeven around 2 years from today. How fast will BMK have to grow each year in order to reach the breakeven point by 2021? Working backwards from analyst estimates, it turns out that they expect the company to grow 90% year-on-year, on average, which is rather optimistic! Should the business grow at a slower rate, it will become profitable at a later date than expected.

AIM:BMK Past and Future Earnings, July 4th 2019

I’m not going to go through company-specific developments for BMK given that this is a high-level summary, but, take into account 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.

One thing I’d like to point out is that BMK has managed its capital judiciously, with debt making up 24% of equity. This means that BMK 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 BMK, so if you are interested in understanding the company at a deeper level, take a look at BMK’s company page on Simply Wall St. I’ve also put together a list of key aspects you should further research:

  1. Historical Track Record: What has BMK'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 Benchmark 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.

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