Local Bounti Corporation (NYSE:LOCL): When Will It Breakeven?
Local Bounti Corporation (NYSE:LOCL) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. Local Bounti Corporation grows fresh greens and herbs in the United States. The company’s loss has recently broadened since it announced a US$56m loss in the full financial year, compared to the latest trailing-twelve-month loss of US$113m, moving it further away from breakeven. Many investors are wondering about the rate at which Local Bounti will turn a profit, with the big question being “when will the company breakeven?” Below we will provide a high-level summary of the industry analysts’ expectations for the company.
See our latest analysis for Local Bounti
Consensus from 5 of the American Food analysts is that Local Bounti is on the verge of breakeven. They expect the company to post a final loss in 2024, before turning a profit of US$69m in 2025. 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 59%, 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 Local Bounti given that this is a high-level summary, but, keep 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 Local Bounti is its relatively high level of debt. Generally, the rule of thumb is debt shouldn’t exceed 40% of your equity, which in Local Bounti's case is 95%. Note that a higher debt obligation increases the risk in investing in the loss-making company.
This article is not intended to be a comprehensive analysis on Local Bounti, so if you are interested in understanding the company at a deeper level, take a look at Local Bounti's company page on Simply Wall St. We've also compiled a list of relevant factors you should look at:
Valuation: What is Local Bounti 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 Local Bounti 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 Local Bounti’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.
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.
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