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The Green Organic Dutchman Holdings Ltd. (TSE:TGOD): Are Analysts Optimistic?

Simply Wall St

The Green Organic Dutchman Holdings Ltd.’s (TSE:TGOD): The Green Organic Dutchman Holdings Ltd., through its subsidiary, The Green Organic Dutchman Ltd., operates as a cannabinoid-based research and development company in Canada. The CA$996m market-cap posted a loss in its most recent financial year of -CA$13.5m and a latest trailing-twelve-month loss of -CA$33.4m leading to an even wider gap between loss and breakeven. As path to profitability is the topic on TGOD’s investors mind, I’ve decided to gauge market sentiment. Below I will provide a high-level summary of the industry analysts’ expectations for TGOD.

See our latest analysis for Green Organic Dutchman Holdings

TGOD is bordering on breakeven, according to the 2 Pharmaceuticals analysts. They anticipate the company to incur a final loss in 2019, before generating positive profits of CA$70m in 2020. So, TGOD is predicted to breakeven approximately a couple of months from now! What rate will TGOD have to grow year-on-year in order to breakeven on this date? Using a line of best fit, I calculated an average annual growth rate of 82%, which is extremely buoyant. If this rate turns out to be too aggressive, TGOD may become profitable much later than analysts predict.

TSX:TGOD Past and Future Earnings, February 26th 2019

I’m not going to go through company-specific developments for TGOD given that this is a high-level summary, though, keep in mind that generally pharmaceuticals, depending on the stage of product development, have irregular periods of cash flow. So, a high growth rate is not out of the ordinary, particularly when a company is in a period of investment.

One thing I’d like to point out is that TGOD has no debt on its balance sheet, which is rare for a loss-making pharma, which typically has high debt relative to its equity. TGOD currently operates purely off its shareholder funding and has no debt obligation, reducing concerns around repayments and making it a less risky investment.

Next Steps:

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

  1. Valuation: What is TGOD 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 TGOD 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 Green Organic Dutchman Holdings’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.