Mighty Craft Limited (ASX:MCL): When Will It Breakeven?

Simply Wall St
·2 min read

We feel now is a pretty good time to analyse Mighty Craft Limited's (ASX:MCL) business as it appears the company may be on the cusp of a considerable accomplishment. Mighty Craft Limited acquires and operates breweries, distilleries, bars, and restaurants in Australia. The AU$56m market-cap company posted a loss in its most recent financial year of AU$8.5m and a latest trailing-twelve-month loss of AU$11m leading to an even wider gap between loss and breakeven. The most pressing concern for investors is Mighty Craft's path to profitability – when will it breakeven? Below we will provide a high-level summary of the industry analysts’ expectations for the company.

See our latest analysis for Mighty Craft

Mighty Craft is bordering on breakeven, according to some Australian Hospitality analysts. They expect the company to post a final loss in 2022, before turning a profit of AU$2.2m in 2023. Therefore, the company is expected to breakeven roughly 2 years from today. How fast will the company have to grow each year in order to reach the breakeven point by 2023? Working backwards from analyst estimates, it turns out that they expect the company to grow 67% year-on-year, on average, 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

Underlying developments driving Mighty Craft's growth isn’t the focus of this broad overview, though, keep in mind that generally a high forecast growth rate is not unusual for a company that is currently undergoing an investment period.

One thing we’d like to point out is that The company has managed its capital judiciously, with debt making up 19% 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:

There are too many aspects of Mighty Craft to cover in one brief article, but the key fundamentals for the company can all be found in one place – Mighty Craft's company page on Simply Wall St. We've also put together a list of pertinent aspects you should further research:

  1. Valuation: What is Mighty Craft 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 Mighty Craft 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 Mighty Craft’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.

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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