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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. On 30 September 2018, the UK£301m market-cap posted a loss of -UK£5.0m for its most recent financial year. The most pressing concern for investors is BMK’s path to profitability – when will it breakeven? I’ve put together a brief outline of industry analyst expectations for BMK, its year of breakeven and its implied growth rate.
Consensus from the 3 Pharmaceuticals analysts is BMK is on the verge of breakeven. They expect the company to post a final loss in 2019, before turning a profit of UK£3.0m in 2020. Therefore, BMK is expected to breakeven roughly a few months from now. In order to meet this breakeven date, I calculated the rate at which BMK must grow year-on-year. It turns out an average annual growth rate of 61% is expected, which is extremely buoyant. Should the business grow at a slower rate, it will become profitable at a later date than expected.
Given this is a high-level overview, I won’t go into details of BMK’s upcoming projects, however, 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. 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 prudently, with debt making up 21% 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.
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 pertinent factors you should further research:
- Valuation: What is BMK 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 BMK 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 Benchmark Holdings’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.
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 firstname.lastname@example.org. 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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