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$125m 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.

Check out our latest analysis for Bubs Australia

Consensus from 3 of the Australian Food analysts is that Bubs Australia is on the verge of breakeven. They expect the company to post a final loss in 2025, before turning a profit of AU$900k in 2026. Therefore, the company is expected to breakeven roughly 2 years 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 127%, 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 Bubs Australia's upcoming projects, though, bear in mind that generally a high growth rate is not out of the ordinary, particularly when a company is in a period of investment.

One thing we’d like to point out is that The company has managed its capital judiciously, 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:

This article is not intended to be a comprehensive analysis on Bubs Australia, so if you are interested in understanding the company at a deeper level, take a look at Bubs Australia's company page on Simply Wall St. We've also compiled a list of essential factors you should further research:

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.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.