With the business potentially at an important milestone, we thought we'd take a closer look at SunOpta Inc.'s (NASDAQ:STKL) future prospects. SunOpta Inc. manufactures and sells plant-based and fruit-based food and beverage products to retail customers, foodservice distributors, branded food companies, and food manufacturers worldwide. The US$1.1b market-cap company posted a loss in its most recent financial year of US$8.3m and a latest trailing-twelve-month loss of US$4.8m shrinking the gap between loss and breakeven. Many investors are wondering about the rate at which SunOpta will turn a profit, with the big question being “when will the company breakeven?” We've put together a brief outline of industry analyst expectations for the company, its year of breakeven and its implied growth rate.
SunOpta is bordering on breakeven, according to the 6 American Food analysts. They anticipate the company to incur a final loss in 2022, before generating positive profits of US$13m in 2023. So, the company is predicted to breakeven approximately 12 months from now or less. We calculated the rate at which the company must grow to meet the consensus forecasts predicting breakeven within 12 months. It turns out an average annual growth rate of 200% is expected, 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 SunOpta's upcoming projects, though, take into account that typically a high growth rate is not out of the ordinary, particularly when a company is in a period of investment.
One thing we would like to bring into light with SunOpta is its relatively high level of debt. Generally, the rule of thumb is debt shouldn’t exceed 40% of your equity, which in SunOpta's case is 58%. A higher level of debt requires more stringent capital management which increases the risk around investing in the loss-making company.
There are key fundamentals of SunOpta which are not covered in this article, but we must stress again that this is merely a basic overview. For a more comprehensive look at SunOpta, take a look at SunOpta's company page on Simply Wall St. We've also compiled a list of important factors you should further examine:
- Valuation: What is SunOpta 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 SunOpta 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 SunOpta’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.
Valuation is complex, but we're helping make it simple.
Find out whether SunOpta is potentially over or undervalued by checking out our comprehensive analysis, which includes fair value estimates, risks and warnings, dividends, insider transactions and financial health.View the Free Analysis
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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.
SunOpta Inc. manufactures and sells plant-based and fruit-based food and beverage products to retail customers, foodservice distributors, branded food companies, and food manufacturers worldwide.
The Snowflake is a visual investment summary with the score of each axis being calculated by 6 checks in 5 areas.
|Analysis Area||Score (0-6)|
Read more about these checks in the individual report sections or in our analysis model.
Reasonable growth potential and fair value.