Bubs Australia Limited's (ASX:BUB): Bubs Australia Limited produces and sells various infant nutrition products in Australia, China, and internationally. With the latest financial year loss of AU$35.5m and a trailing-twelve month loss of AU$34.2m, the AU$546m market-cap alleviates its loss by moving closer towards its target of breakeven. Many investors are wondering the rate at which BUB will turn a profit, with the big question being “when will the company breakeven?” I’ve put together a brief outline of industry analyst expectations for BUB, its year of breakeven and its implied growth rate.
According to the 3 industry analysts covering BUB, the consensus is breakeven is near. They anticipate the company to incur a final loss in 2020, before generating positive profits of AU$2.1m in 2021. So, BUB is predicted to breakeven approximately a couple of months from now! How fast will BUB have to grow each year in order to reach the breakeven point by 2021? Working backwards from analyst estimates, it turns out that they expect the company to grow 50% year-on-year, on average, which is extremely buoyant. Should the business grow at a slower rate, it will become profitable at a later date than expected.
Underlying developments driving BUB’s growth isn’t the focus of this broad overview, 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. BUB has managed its capital prudently, with debt making up 1.5% of equity. This means that BUB has predominantly funded its operations from equity capital,and its low debt obligation reduces the risk around investing in the loss-making company.
There are too many aspects of BUB to cover in one brief article, but the key fundamentals for the company can all be found in one place – BUB’s company page on Simply Wall St. I’ve also compiled a list of relevant factors you should further examine:
- Valuation: What is BUB 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 BUB 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 Bubs Australia’s board and the CEO’s back ground.
- 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.
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