SugarBud Craft Growers Corp.’s (CVE:SUGR): SugarBud Craft Growers Corp. engages in the acquisition, development, production, and distribution of cannabis in Canada. The CA$52m market-cap posted a loss in its most recent financial year of -CA$6.2m and a latest trailing-twelve-month loss of -CA$4.5m shrinking the gap between loss and breakeven. The most pressing concern for investors is SUGR’s path to profitability – when will it breakeven? Below I will provide a high-level summary of the industry analysts’ expectations for SUGR.
View our latest analysis for SugarBud Craft Growers
Expectation from Pharmaceuticals analysts is SUGR is on the verge of breakeven. They anticipate the company to incur a final loss in 2019, before generating positive profits of CA$1.2m in 2020. Therefore, SUGR is expected to breakeven roughly a few months from now. What rate will SUGR 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 60%, which is extremely buoyant. Should the business grow at a slower rate, it will become profitable at a later date than expected.
TSXV:SUGR Past and Future Earnings, September 4th 2019 Given this is a high-level overview, I won’t go into details of SUGR’s upcoming projects, but, keep in mind that by and large a pharma company has lumpy cash flows which are contingent on the drug and stage of product development the business is in. This means that a high growth rate is not unusual, especially if the company is currently in an investment period.
One thing I’d like to point out is that SUGR has managed its capital prudently, with debt making up 2.5% of equity. This means that SUGR 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 SUGR, so if you are interested in understanding the company at a deeper level, take a look at SUGR’s company page on Simply Wall St. I’ve also compiled a list of important aspects you should further research:
- Valuation: What is SUGR 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 SUGR 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 SugarBud Craft Growers’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.
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