We feel now is a pretty good time to analyse Freshpet, Inc.'s (NASDAQ:FRPT) business as it appears the company may be on the cusp of a considerable accomplishment. Freshpet, Inc. manufactures and markets natural fresh meals and treats for dogs and cats in the United States, Canada, and the United Kingdom. The company’s loss has recently broadened since it announced a US$3.2m loss in the full financial year, compared to the latest trailing-twelve-month loss of US$24m, moving it further away from breakeven. The most pressing concern for investors is Freshpet's path to profitability – when will it breakeven? We've put together a brief outline of industry analyst expectations for the company, its year of breakeven and its implied growth rate.
Freshpet is bordering on breakeven, according to the 15 American Food analysts. They expect the company to post a final loss in 2022, before turning a profit of US$16m in 2023. Therefore, the company is expected to breakeven just over a year from today. What rate will the company have to grow year-on-year in order to breakeven on this date? Using a line of best fit, we calculated an average annual growth rate of 75%, which is extremely buoyant. If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.
Given this is a high-level overview, we won’t go into details of Freshpet's upcoming projects, but, 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. Freshpet currently has no debt on its balance sheet, which is quite unusual for a cash-burning growth company, which typically has high debt relative to its equity. This means that the company has been operating purely on its equity investment and has no debt burden. This aspect reduces the risk around investing in the loss-making company.
There are too many aspects of Freshpet to cover in one brief article, but the key fundamentals for the company can all be found in one place – Freshpet's company page on Simply Wall St. We've also compiled a list of key aspects you should further research:
- Historical Track Record: What has Freshpet'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.
- Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Freshpet's board and the CEO’s background.
- 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. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.