Hydrofarm Holdings Group, Inc. (NASDAQ:HYFM) On The Verge Of Breaking Even

We feel now is a pretty good time to analyse Hydrofarm Holdings Group, Inc.'s (NASDAQ:HYFM) business as it appears the company may be on the cusp of a considerable accomplishment. Hydrofarm Holdings Group, Inc., together with its subsidiaries, engages in the manufacture and distribution of controlled environment agriculture (CEA) equipment and supplies in the United States and Canada. The US$2.5b market-cap company announced a latest loss of US$9.9m on 31 December 2020 for its most recent financial year result. The most pressing concern for investors is Hydrofarm Holdings Group's path to profitability – when will it breakeven? Below we will provide a high-level summary of the industry analysts’ expectations for the company.

Check out our latest analysis for Hydrofarm Holdings Group

Consensus from 5 of the American Machinery analysts is that Hydrofarm Holdings Group is on the verge of breakeven. They anticipate the company to incur a final loss in 2020, before generating positive profits of US$19m in 2021. The company is therefore projected to breakeven around 12 months from now or less. At what rate will the company have to grow in order to realise the consensus estimates forecasting breakeven in under 12 months? Using a line of best fit, we calculated an average annual growth rate of 66%, which is rather optimistic! Should the business grow at a slower rate, it will become profitable at a later date than expected.

Underlying developments driving Hydrofarm Holdings Group's growth isn’t the focus of this broad overview, though, take into account that typically a high forecast growth rate is not unusual for a company that is currently undergoing an investment period.

Before we wrap up, there’s one aspect worth mentioning. The company has managed its capital judiciously, with debt making up 0.3% of equity. This means that it 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 Hydrofarm Holdings Group, so if you are interested in understanding the company at a deeper level, take a look at Hydrofarm Holdings Group's company page on Simply Wall St. We've also compiled a list of key factors you should look at:

1. Valuation: What is Hydrofarm Holdings Group 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 Hydrofarm Holdings Group 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 Hydrofarm Holdings Group’s board and the CEO’s background.
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.

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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. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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