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Market Sentiment Around Loss-Making The Flowr Corporation (CVE:FLWR)

Simply Wall St

The Flowr Corporation’s (CVE:FLWR): The Flowr Corporation cultivates and produces medicinal cannabis in Canada. The CA$477m market-cap posted a loss in its most recent financial year of -CA$1.9m and a latest trailing-twelve-month loss of -CA$11.3m leading to an even wider gap between loss and breakeven. As path to profitability is the topic on FLWR’s investors mind, I’ve decided to gauge market sentiment. In this article, I will touch on the expectations for FLWR’s growth and when analysts expect the company to become profitable.

View our latest analysis for Flowr

Consensus from the 2 Pharmaceuticals analysts is FLWR is on the verge of breakeven. They anticipate the company to incur a final loss in 2018, before generating positive profits of CA$1.1m in 2019. So, FLWR is predicted to breakeven approximately a few months from now. In order to meet this breakeven date, I calculated the rate at which FLWR must grow year-on-year. It turns out an average annual growth rate of 102% is expected, which is extremely buoyant. Should the business grow at a slower rate, it will become profitable at a later date than expected.

TSXV:FLWR Past and Future Earnings, February 27th 2019

Given this is a high-level overview, I won’t go into details of FLWR’s upcoming projects, though, bear 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.

Before I wrap up, there’s one aspect worth mentioning. FLWR currently has no debt on its balance sheet, which is quite unusual for a cash-burning pharma, which typically has high debt relative to its equity. FLWR 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 FLWR, so if you are interested in understanding the company at a deeper level, take a look at FLWR’s company page on Simply Wall St. I’ve also compiled a list of pertinent factors you should further research:

  1. Valuation: What is FLWR 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 FLWR 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 Flowr’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.