Westrock Coffee Company's (NASDAQ:WEST) Shift From Loss To Profit

Westrock Coffee Company (NASDAQ:WEST) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. Westrock Coffee Company, LLC operates as an integrated coffee, tea, flavors, extracts, and ingredients solutions provider in the United States and internationally. With the latest financial year loss of US$35m and a trailing-twelve-month loss of US$75m, the US$659m market-cap company amplified its loss by moving further away from its breakeven target. Many investors are wondering about the rate at which Westrock Coffee will turn a profit, with the big question being “when will the company breakeven?” Below we will provide a high-level summary of the industry analysts’ expectations for the company.

See our latest analysis for Westrock Coffee

According to the 5 industry analysts covering Westrock Coffee, the consensus is that breakeven is near. They anticipate the company to incur a final loss in 2025, before generating positive profits of US$26m in 2026. The company is therefore projected to breakeven around 2 years from now. How fast will the company have to grow each year in order to reach the breakeven point by 2026? Working backwards from analyst estimates, it turns out that they expect the company to grow 98% year-on-year, on average, which is rather optimistic! If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.

We're not going to go through company-specific developments for Westrock Coffee given that this is a high-level summary, though, keep in mind that typically a high forecast growth rate is not unusual for a company that is currently undergoing an investment period.

One thing we would like to bring into light with Westrock Coffee is its debt-to-equity ratio of 135%. Typically, debt shouldn’t exceed 40% of your equity, and the company has considerably exceeded this. A higher level of debt requires more stringent capital management which increases the risk around investing in the loss-making company.

Next Steps:

This article is not intended to be a comprehensive analysis on Westrock Coffee, so if you are interested in understanding the company at a deeper level, take a look at Westrock Coffee's company page on Simply Wall St. We've also put together a list of essential factors you should look at:

1. Historical Track Record: What has Westrock Coffee'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 Westrock Coffee'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. 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.