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We feel now is a pretty good time to analyse Little Green Pharma Ltd's (ASX:LGP) business as it appears the company may be on the cusp of a considerable accomplishment. Little Green Pharma Ltd engages in the cultivation, production, and distribution of medicinal cannabis products in Australia and internationally. The AU$41m market-cap company announced a latest loss of AU$8.2m on 31 March 2024 for its most recent financial year result. Many investors are wondering about the rate at which Little Green Pharma will turn a profit, with the big question being “when will the company breakeven?” We've put together a brief outline of industry analyst expectations for the company, its year of breakeven and its implied growth rate.
View our latest analysis for Little Green Pharma
According to some industry analysts covering Little Green Pharma, breakeven is near. They anticipate the company to incur a final loss in 2025, before generating positive profits of AU$100k in 2026. So, the company is predicted to breakeven approximately 2 years from today. 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 110% is expected, which is rather optimistic! Should the business grow at a slower rate, it will become profitable at a later date than expected.
Given this is a high-level overview, we won’t go into details of Little Green Pharma's upcoming projects, though, bear in mind that by and large pharmaceuticals, depending on the stage of product development, have irregular periods of cash flow. This means that a high growth rate is not unusual, especially if the company is currently in an investment period.
Before we wrap up, there’s one aspect worth mentioning. The company has managed its capital prudently, with debt making up 4.5% 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:
This article is not intended to be a comprehensive analysis on Little Green Pharma, so if you are interested in understanding the company at a deeper level, take a look at Little Green Pharma's company page on Simply Wall St. We've also compiled a list of important aspects you should further examine:
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Valuation: What is Little Green Pharma 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 Little Green Pharma 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 Little Green Pharma’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.