East 33 Limited's (ASX:E33) Profit Outlook
East 33 Limited (ASX:E33) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. East 33 Limited produces, processes, and supplies rock oysters in Australia. The AU$15m market-cap company’s loss lessened since it announced a AU$5.5m loss in the full financial year, compared to the latest trailing-twelve-month loss of AU$3.9m, as it approaches breakeven. The most pressing concern for investors is East 33's path to profitability – when will it breakeven? In this article, we will touch on the expectations for the company's growth and when analysts expect it to become profitable.
View our latest analysis for East 33
Expectations from some of the Australian Food analysts is that East 33 is on the verge of breakeven. They expect the company to post a final loss in 2022, before turning a profit of AU$2.5m in 2023. The company is therefore projected to breakeven just over a year from now. 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 57% is expected, which is rather optimistic! Should the business grow at a slower rate, it will become profitable at a later date than expected.
We're not going to go through company-specific developments for East 33 given that this is a high-level summary, though, bear in mind that by and large a high growth rate is not out of the ordinary, particularly when a company is in a period of investment.
One thing we would like to bring into light with East 33 is its relatively high level of debt. Generally, the rule of thumb is debt shouldn’t exceed 40% of your equity, which in East 33's case is 46%. Note that a higher debt obligation increases the risk around investing in the loss-making company.
Next Steps:
This article is not intended to be a comprehensive analysis on East 33, so if you are interested in understanding the company at a deeper level, take a look at East 33's company page on Simply Wall St. We've also compiled a list of pertinent aspects you should look at:
Valuation: What is East 33 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 East 33 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 East 33’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.
