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With the business potentially at an important milestone, we thought we'd take a closer look at Bubs Australia Limited's (ASX:BUB) future prospects. Bubs Australia Limited, together with its subsidiaries, engages in the production and sale of various infant nutrition products in Australia, China, and internationally. The AU$251m market-cap company posted a loss in its most recent financial year of AU$75m and a latest trailing-twelve-month loss of AU$62m shrinking the gap between loss and breakeven. Many investors are wondering about the rate at which Bubs Australia will turn a profit, with the big question being “when will the company breakeven?” In this article, we will touch on the expectations for the company's growth and when analysts expect it to become profitable.
See our latest analysis for Bubs Australia
Bubs Australia is bordering on breakeven, according to the 4 Australian Food analysts. They expect the company to post a final loss in 2023, before turning a profit of AU$2.2m in 2024. Therefore, the company is expected to breakeven roughly 2 years from now. In order to meet this breakeven date, we calculated the rate at which the company must grow year-on-year. It turns out an average annual growth rate of 74% is expected, which is rather optimistic! 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 Bubs Australia's upcoming projects, however, bear in mind that typically a high growth rate is not out of the ordinary, particularly when a company is in a period of investment.
One thing we’d like to point out is that The company has managed its capital prudently, with debt making up 2.3% 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.
Next Steps:
There are too many aspects of Bubs Australia to cover in one brief article, but the key fundamentals for the company can all be found in one place – Bubs Australia's company page on Simply Wall St. We've also put together a list of key aspects you should look at:
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Valuation: What is Bubs Australia 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 Bubs Australia is currently mispriced by the market.
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Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Bubs Australia’s board and the CEO’s background.
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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.
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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.