When Will SLANG Worldwide Inc. (CNSX:SLNG) Become Profitable?
SLANG Worldwide Inc.'s (CNSX:SLNG): SLANG Worldwide Inc. operates as a cannabis consumer packaged goods company worldwide. The CA$470m market-cap company announced a latest loss of -CA$28.3m on 31 December 2018 for its most recent financial year result. The most pressing concern for investors is SLNG’s path to profitability – when will it breakeven? I’ve put together a brief outline of industry analyst expectations for SLNG, its year of breakeven and its implied growth rate.
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Consensus from the 2 Pharmaceuticals analysts is SLNG is on the verge of breakeven. They anticipate the company to incur a final loss in 2019, before generating positive profits of CA$59m in 2020. Therefore, SLNG is expected to breakeven roughly a few months from now. How fast will SLNG have to grow each year in order to reach the breakeven point by 2020? Working backwards from analyst estimates, it turns out that they expect the company to grow 69% year-on-year, on average, which is extremely buoyant. If this rate turns out to be too aggressive, SLNG may become profitable much later than analysts predict.
I’m not going to go through company-specific developments for SLNG given that this is a high-level summary, however, take into account that typically a pharma company has lumpy cash flows which are contingent on the drug and stage of product development the business is in. This means, large upcoming growth rates are not abnormal as the company is beginning to reap the benefits of earlier investments.
Before I wrap up, there’s one aspect worth mentioning. SLNG has managed its capital prudently, with debt making up 4.2% of equity. This means that SLNG 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:
This article is not intended to be a comprehensive analysis on SLNG, so if you are interested in understanding the company at a deeper level, take a look at SLNG’s company page on Simply Wall St. I’ve also put together a list of key factors you should look at:
Valuation: What is SLNG 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 SLNG 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 SLANG Worldwide’s board and the CEO’s back ground.
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.
