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Biomerica, Inc.'s (NASDAQ:BMRA) Path To Profitability

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·3 min read
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We feel now is a pretty good time to analyse Biomerica, Inc.'s (NASDAQ:BMRA) business as it appears the company may be on the cusp of a considerable accomplishment. Biomerica, Inc., a biomedical technology company, together with its subsidiaries, develops, patents, manufactures, and markets diagnostic and therapeutic products or detection and/or treatment of medical conditions and diseases worldwide. The company’s loss has recently broadened since it announced a US$2.3m loss in the full financial year, compared to the latest trailing-twelve-month loss of US$5.5m, moving it further away from breakeven. The most pressing concern for investors is Biomerica'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.

See our latest analysis for Biomerica

Consensus from 3 of the American Medical Equipment analysts is that Biomerica is on the verge of breakeven. They expect the company to post a final loss in 2021, before turning a profit of US$2.6m in 2022. So, the company is predicted to breakeven just over a year from now. 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 125%, which signals high confidence from analysts. Should the business grow at a slower rate, it will become profitable at a later date than expected.

earnings-per-share-growth
earnings-per-share-growth

Given this is a high-level overview, we won’t go into details of Biomerica's upcoming projects, but, keep in mind that by and large a high forecast growth rate is not unusual for a company that is currently undergoing an investment period.

One thing we’d like to point out is that Biomerica has no debt on its balance sheet, which is rare for a loss-making growth company, which usually has a high level of 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.

Next Steps:

This article is not intended to be a comprehensive analysis on Biomerica, so if you are interested in understanding the company at a deeper level, take a look at Biomerica's company page on Simply Wall St. We've also compiled a list of key aspects you should further examine:

  1. Valuation: What is Biomerica 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 Biomerica 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 Biomerica’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.

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.