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Flora Growth Corp. (NASDAQ:FLGC): Is Breakeven Near?

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Flora Growth Corp. (NASDAQ:FLGC) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. Flora Growth Corp., together with its subsidiaries, engages in the growth, cultivation, and development of medicinal cannabis and medicinal cannabis derivative products to pharmacies, medical clinics, and cosmetic companies worldwide. The US$49m market-cap company announced a latest loss of US$21m on 31 December 2021 for its most recent financial year result. As path to profitability is the topic on Flora Growth's investors mind, we've decided to gauge market sentiment. Below we will provide a high-level summary of the industry analysts’ expectations for the company.

See our latest analysis for Flora Growth

According to the 3 industry analysts covering Flora Growth, the consensus is that breakeven is near. They expect the company to post a final loss in 2022, before turning a profit of US$8.7m in 2023. Therefore, the company is expected 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 146%, which signals high confidence from analysts. If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.

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

We're not going to go through company-specific developments for Flora Growth given that this is a high-level summary, though, keep in mind that by and large a high growth rate is not out of the ordinary, particularly when a company is in a period of investment.

One thing we’d like to point out is that The company has managed its capital prudently, with debt making up 0.02% of equity. This means that it 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:

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

  1. Historical Track Record: What has Flora Growth'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 Flora Growth'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.

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

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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