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We feel now is a pretty good time to analyse Freshlocal Solutions Inc.'s (TSE:LOCL) business as it appears the company may be on the cusp of a considerable accomplishment. Freshlocal Solutions Inc. provides end-to-end grocery e-commerce solutions. The CA$62m market-cap company posted a loss in its most recent financial year of CA$31m and a latest trailing-twelve-month loss of CA$37m leading to an even wider gap between loss and breakeven. The most pressing concern for investors is Freshlocal Solutions' path to profitability – when will it breakeven? Below we will provide a high-level summary of the industry analysts’ expectations for the company.
Consensus from 3 of the Canadian Consumer Retailing analysts is that Freshlocal Solutions is on the verge of breakeven. They expect the company to post a final loss in 2023, before turning a profit of CA$5.8m in 2024. The company is therefore projected to breakeven around 3 years from today. How fast will the company have to grow each year in order to reach the breakeven point by 2024? Working backwards from analyst estimates, it turns out that they expect the company to grow 66% year-on-year, on average, which is rather optimistic! Should the business grow at a slower rate, it will become profitable at a later date than expected.
We're not going to go through company-specific developments for Freshlocal Solutions 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 Freshlocal Solutions is its debt-to-equity ratio of 121%. Typically, debt shouldn’t exceed 40% of your equity, which in this case, the company has significantly overshot. Note that a higher debt obligation increases the risk in investing in the loss-making company.
There are too many aspects of Freshlocal Solutions to cover in one brief article, but the key fundamentals for the company can all be found in one place – Freshlocal Solutions' company page on Simply Wall St. We've also compiled a list of essential factors you should further research:
Valuation: What is Freshlocal Solutions 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 Freshlocal Solutions 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 Freshlocal Solutions’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.
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.
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