Reed's, Inc. (NASDAQ:REED) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. Reed's, Inc. engages in the manufacture and distribution of natural hand-crafted beverages in the craft specialty foods industry in the United States, Canada, Asia, Europe, Australia, and South America. The US$22m market-cap company posted a loss in its most recent financial year of US$16m and a latest trailing-twelve-month loss of US$19m leading to an even wider gap between loss and breakeven. The most pressing concern for investors is Reed's' path to profitability – when will it breakeven? We've put together a brief outline of industry analyst expectations for the company, its year of breakeven and its implied growth rate.
Consensus from 2 of the American Beverage analysts is that Reed's is on the verge of breakeven. They expect the company to post a final loss in 2023, before turning a profit of US$3.6m in 2024. 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 67% is expected, which signals high confidence from analysts. 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 Reed's' upcoming projects, though, bear in mind that typically a high forecast growth rate is not unusual for a company that is currently undergoing an investment period.
One thing we would like to bring into light with Reed's is it currently has negative equity on its balance sheet. This can sometimes arise from accounting methods used to deal with accumulated losses from prior years, which are viewed as liabilities carried forward until it cancels out in the future. Oftentimes, losses exist only on paper but other times, it can be a red flag.
There are key fundamentals of Reed's which are not covered in this article, but we must stress again that this is merely a basic overview. For a more comprehensive look at Reed's, take a look at Reed's' company page on Simply Wall St. We've also compiled a list of key aspects you should further research:
Valuation: What is Reed's 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 Reed's 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 Reed's’s board and the CEO’s background.
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.
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