We feel now is a pretty good time to analyse The Valens Company Inc.’s (TSE:VLNS) business as it appears the company may be on the cusp of a considerable accomplishment. The Valens Company Inc., engages in the development and manufacturing of cannabinoid based products. The company’s loss has recently broadened since it announced a CA$21m loss in the full financial year, compared to the latest trailing-twelve-month loss of CA$29m, moving it further away from breakeven. As path to profitability is the topic on Valens’ investors mind, we’ve decided to gauge market sentiment. In this article, we will touch on the expectations for the company’s growth and when analysts expect it to become profitable.
Check out our latest analysis for Valens
Consensus from 7 of the Canadian Pharmaceuticals analysts is that Valens is on the verge of breakeven. They expect the company to post a final loss in 2021, before turning a profit of CA$10m in 2022. The company is therefore projected to breakeven just over a year from now. What rate will the company have to grow year-on-year in order to breakeven on this date? Using a line of best fit, we calculated an average annual growth rate of 63%, which signals high confidence from analysts. Should the business grow at a slower rate, it will become profitable at a later date than expected.
TSX:VLNS Earnings Per Share Growth July 10th 2021
We’re not going to go through company-specific developments for Valens given that this is a high-level summary, but, take into account that typically a pharma company has lumpy cash flows which are contingent on the drug and stage of product development the business is in. This means, large upcoming growth rates are not abnormal as the company is beginning to reap the benefits of earlier investments.
One thing we’d like to point out is that The company has managed its capital judiciously, with debt making up 5.6% 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.
This article is not intended to be a comprehensive analysis on Valens, so if you are interested in understanding the company at a deeper level, take a look at Valens’ company page on Simply Wall St. We’ve also put together a list of important factors you should further research:
- Valuation: What is Valens 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 Valens 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 Valens’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. 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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