We feel now is a pretty good time to analyse SunOpta Inc.'s (NASDAQ:STKL) business as it appears the company may be on the cusp of a considerable accomplishment. SunOpta Inc. manufactures and sells plant-based and fruit-based food and beverage products to retail customers, foodservice distributors, branded food companies, and food manufacturers worldwide. The US$1.1b market-cap company posted a loss in its most recent financial year of US$8.3m and a latest trailing-twelve-month loss of US$4.8m shrinking the gap between loss and breakeven. The most pressing concern for investors is SunOpta'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.
SunOpta is bordering on breakeven, according to the 6 American Food analysts. They expect the company to post a final loss in 2022, before turning a profit of US$13m in 2023. The company is therefore projected to breakeven around 12 months from now or less. How fast will the company have to grow to reach the consensus forecasts that anticipate breakeven by 2023? Working backwards from analyst estimates, it turns out that they expect the company to grow 200% year-on-year, on average, 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 SunOpta's upcoming projects, however, keep in mind that by and large 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 SunOpta is its relatively high level of debt. Typically, debt shouldn’t exceed 40% of your equity, which in SunOpta's case is 58%. A higher level of debt requires more stringent capital management which increases the risk around investing in the loss-making company.
This article is not intended to be a comprehensive analysis on SunOpta, so if you are interested in understanding the company at a deeper level, take a look at SunOpta's company page on Simply Wall St. We've also compiled a list of important aspects you should further examine:
Valuation: What is SunOpta 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 SunOpta 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 SunOpta’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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