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When Will Aleafia Health Inc. (TSE:ALEF) Become Profitable?

Simply Wall St

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Aleafia Health Inc.'s (TSE:ALEF): Aleafia Health Inc. operates as an integrated cannabis health and wellness company. The company’s loss has recently broadened since it announced a -CA$18.5m loss in the full financial year, compared to the latest trailing-twelve-month loss of -CA$37.1m, moving it further away from breakeven. Many investors are wondering the rate at which ALEF will turn a profit, with the big question being “when will the company breakeven?” Below I will provide a high-level summary of the industry analysts’ expectations for ALEF.

View our latest analysis for Aleafia Health

According to the industry analysts covering ALEF, breakeven is near. They anticipate the company to incur a final loss in 2019, before generating positive profits of CA$2.0m in 2020. ALEF is therefore projected to breakeven around a couple of months from now! In order to meet this breakeven date, I calculated the rate at which ALEF must grow year-on-year. It turns out an average annual growth rate of 95% is expected, which is rather optimistic! If this rate turns out to be too aggressive, ALEF may become profitable much later than analysts predict.

TSX:ALEF Past and Future Earnings, June 13th 2019
TSX:ALEF Past and Future Earnings, June 13th 2019

Given this is a high-level overview, I won’t go into details of ALEF’s upcoming projects, though, keep in mind that generally a high growth rate is not out of the ordinary, particularly when a company is in a period of investment.

Before I wrap up, there’s one aspect worth mentioning. ALEF has managed its capital judiciously, with debt making up 5.4% of equity. This means that ALEF 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:

There are key fundamentals of ALEF which are not covered in this article, but I must stress again that this is merely a basic overview. For a more comprehensive look at ALEF, take a look at ALEF’s company page on Simply Wall St. I’ve also compiled a list of key factors you should further examine:

  1. Valuation: What is ALEF 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 ALEF 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 Aleafia Health’s board and the CEO’s back ground.

  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.

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 editorial-team@simplywallst.com. 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.