We feel now is a pretty good time to analyse Bubs Australia Limited's (ASX:BUB) business as it appears the company may be on the cusp of a considerable accomplishment. Bubs Australia Limited, together with its subsidiaries, engages in the manufacture and sale of various infant nutrition and wellbeing products in Australia, China, the United States, and internationally. The AU$116m market-cap company announced a latest loss of AU$21m on 30 June 2024 for its most recent financial year result. As path to profitability is the topic on Bubs Australia's investors mind, we've decided to gauge market sentiment. We've put together a brief outline of industry analyst expectations for the company, its year of breakeven and its implied growth rate.

See our latest analysis for Bubs Australia

According to the 3 industry analysts covering Bubs Australia, the consensus is that breakeven is near. They anticipate the company to incur a final loss in 2025, before generating positive profits of AU$900k in 2026. Therefore, the company is expected to breakeven roughly 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 127% is expected, which signals high confidence from analysts. If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.

Underlying developments driving Bubs Australia's growth isn’t the focus of this broad overview, however, take into account that typically a high forecast growth rate is not unusual for a company that is currently undergoing an investment period.

One thing we’d like to point out is that The company has managed its capital prudently, with debt making up 14% 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:

There are too many aspects of Bubs Australia to cover in one brief article, but the key fundamentals for the company can all be found in one place – Bubs Australia's company page on Simply Wall St. We've also put together a list of key factors you should look at:

1. Valuation: What is Bubs Australia 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 Bubs Australia is currently mispriced by the market.
2. Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Bubs Australia’s board and the CEO’s background.
3. 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.