Mallinckrodt Public Limited Company’s (NYSE:MNK): Mallinckrodt public limited company develops, manufactures, markets, and distributes branded and generic specialty pharmaceutical products and therapies in the United States, Europe, the Middle East, Africa, and internationally. The company’s loss has recently broadened since it announced a -US$707.20M loss in the full financial year, compared to the latest trailing-twelve-month loss of -US$928.60M, moving it further away from breakeven. Many investors are wondering the rate at which MNK will turn a profit, with the big question being “when will the company breakeven?” In this article, I will touch on the expectations for MNK’s growth and when analysts expect the company to become profitable.
See our latest analysis for Mallinckrodt
According to the industry analysts covering MNK, breakeven is near. They expect the company to post a final loss in 2014, before turning a profit of US$271.71M in 2015. Therefore, MNK is expected to breakeven roughly a few months from now. What rate will MNK have to grow year-on-year in order to breakeven on this date? Using a line of best fit, I calculated an average annual growth rate of -2.14%,
Given this is a high-level overview, I won’t go into detail the detail of MNK’s upcoming projects, but, bear in mind that generally pharmaceuticals, depending on the stage of product development, have irregular periods of cash flow. This means that a low or volatile growth rate in the near future is not unusual, especially if the company is currently in an investment period.
One thing I would like to bring into light with MNK is its debt-to-equity ratio of 114.13%. Typically, debt shouldn’t exceed 40% of your equity, and MNK has considerably exceeded this. Note that a higher debt obligation increases the risk around investing in the loss-making company.
Next Steps:
There are too many aspects of MNK to cover in one brief article, but the key fundamentals for the company can all be found in one place – MNK’s company page on Simply Wall St. I’ve also compiled a list of important aspects you should further examine:
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1. Valuation: What is MNK 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 MNK is currently mispriced by the market.
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2. Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Mallinckrodt’s board and the CEO’s back ground.
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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.
To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned.