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With the business potentially at an important milestone, we thought we'd take a closer look at NEXE Innovations Inc.'s (CVE:NEXE) future prospects. NEXE Innovations Inc. designs, develops, manufactures, and sells plant-based single-serve coffee pods for use in single-serve coffee machines. On 31 May 2021, the CA$67m market-cap company posted a loss of CA$17m for its most recent financial year. As path to profitability is the topic on NEXE Innovations' 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.
Consensus from 2 of the Canadian Packaging analysts is that NEXE Innovations is on the verge of breakeven. They anticipate the company to incur a final loss in 2022, before generating positive profits of CA$2.6m in 2023. Therefore, the company is expected to breakeven roughly 2 years from today. 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 102%, which is extremely buoyant. If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.
Given this is a high-level overview, we won’t go into details of NEXE Innovations' upcoming projects, but, take into account that typically a high forecast growth rate is not unusual for a company that is currently undergoing an investment period.
Before we wrap up, there’s one aspect worth mentioning. The company has managed its capital judiciously, with debt making up 4.3% 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.
This article is not intended to be a comprehensive analysis on NEXE Innovations, so if you are interested in understanding the company at a deeper level, take a look at NEXE Innovations' company page on Simply Wall St. We've also put together a list of relevant factors you should further research:
Historical Track Record: What has NEXE Innovations' 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.
Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on NEXE Innovations' 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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