Aleafia Health Inc. (ALEAF)

[FUNMAN]

Analysts Expect Aleafia Health Inc. (TSE:AH) To Breakeven Soon

By Simply Wall St
Published February 26, 2021

With the business potentially at an important milestone, we thought we'd take a closer look at Aleafia Health Inc.'s (TSE:AH) future prospects.

Aleafia Health Inc. operates as an integrated cannabis health and wellness company. With the latest financial year loss of CA$40m and a trailing-twelve-month loss of CA$40m, the CA$227m market-cap company amplified its loss by moving further away from its breakeven target.

Many investors are wondering about the rate at which Aleafia Health will turn a profit, with the big question being “when will the company breakeven?” We've put together a brief outline of industry analyst expectations for the company, its year of breakeven and its implied growth rate.

Aleafia Health is bordering on breakeven, according to the 3 Canadian Healthcare analysts. They anticipate the company to incur a final loss in 2020, before generating positive profits of CA$10m in 2021.
Therefore, the company is expected to breakeven roughly 12 months from now or less.

We calculated the rate at which the company must grow to meet the consensus forecasts predicting breakeven within 12 months. It turns out an average annual growth rate of 117% 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 the guidance, 117% growth seems like a slam dunk? - FUNMAN


earnings-per-share-growth

TSX:AH Earnings Per Share Growth February 26th 2021

Underlying developments driving Aleafia Health's growth isn’t the focus of this broad overview, but, bear in mind that by and large a high forecast growth rate is not unusual for a company that is currently undergoing an investment period.

Before we wrap up, there’s one aspect worth mentioning. The company has managed its capital prudently, with debt making up 15% 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.

Next Steps:

This article is not intended to be a comprehensive analysis on Aleafia Health, so if you are interested in understanding the company at a deeper level, take a look at Aleafia Health's company page on Simply Wall St.

https://simplywall.st/stocks/ca/healthcare/tsx-ah/aleafia-health-shares

We've also put together a list of relevant aspects you should further examine:

Valuation: What is Aleafia Health 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 Aleafia Health is currently mispriced by the market.

https://simplywall.st/stocks/ca/healthcare/tsx-ah/aleafia-health-shares#value

Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Aleafia Health’s board and the CEO’s background.

https://simplywall.st/stocks/ca/healthcare/tsx-ah/aleafia-health-shares#management

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.


By: Simply Wall St

Simply Wall St is a financial technology startup focused on providing unbiased, high-quality research coverage on every listed company in the world. Our research team consists of equity analysts with a public, market-beating track record.