Reed's, Inc. (NASDAQ:REED): Are Analysts Optimistic?
Reed's, Inc. (NASDAQ:REED) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. Reed's, Inc. manufactures and distributes handcrafted natural beverages in the United States and internationally. The company’s loss has recently broadened since it announced a US$16m loss in the full financial year, compared to the latest trailing-twelve-month loss of US$18m, moving it further away from breakeven. As path to profitability is the topic on Reed's' investors mind, we've decided to gauge market sentiment. In this article, we will touch on the expectations for the company's growth and when analysts expect it to become profitable.
Check out our latest analysis for Reed's
Consensus from 2 of the American Beverage analysts is that Reed's is on the verge of breakeven. They expect the company to post a final loss in 2024, before turning a profit of US$11m in 2025. So, the company is predicted to breakeven approximately 2 years from today. How fast will the company have to grow each year in order to reach the breakeven point by 2025? Working backwards from analyst estimates, it turns out that they expect the company to grow 80% year-on-year, on average, which is rather optimistic! If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.
We're not going to go through company-specific developments for Reed's given that this is a high-level summary, however, take into account that typically a high growth rate is not out of the ordinary, particularly when a company is in a period of investment.
Before we wrap up, there’s one issue worth mentioning. Reed's currently has negative equity on its balance sheet. This can sometimes arise from accounting methods used to deal with accumulated losses from prior years, which are viewed as liabilities carried forward until it cancels out in the future. These losses tend to occur only on paper, however, in other cases it can be forewarning.
Next Steps:
This article is not intended to be a comprehensive analysis on Reed's, so if you are interested in understanding the company at a deeper level, take a look at Reed's' company page on Simply Wall St. We've also compiled a list of important factors you should further research:
Valuation: What is Reed's 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 Reed's is currently mispriced by the market.
Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Reed's’s 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.
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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