We feel now is a pretty good time to analyse Cascades Inc.'s (TSE:CAS) business as it appears the company may be on the cusp of a considerable accomplishment. Cascades Inc. produces, converts, and markets packaging and tissue products in Canada and the United States. The CA$912m market-cap company posted a loss in its most recent financial year of CA$76m and a latest trailing-twelve-month loss of CA$21m shrinking the gap between loss and breakeven. Many investors are wondering about the rate at which Cascades 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 Cascades

Consensus from 5 of the Canadian Packaging analysts is that Cascades is on the verge of breakeven. They expect the company to post a final loss in 2023, before turning a profit of CA$59m in 2024. The company is therefore projected to breakeven around 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 122% is expected, which is extremely buoyant. If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.

Given this is a high-level overview, we won’t go into details of Cascades' upcoming projects, but, keep in mind that typically a high growth rate is not out of the ordinary, particularly when a company is in a period of investment.

Before we wrap up, there’s one issue worth mentioning. Cascades currently has a debt-to-equity ratio of 106%. Generally, the rule of thumb is debt shouldn’t exceed 40% of your equity, which in this case, the company has significantly overshot. Note that a higher debt obligation increases the risk in investing in the loss-making company.

Next Steps:

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

1. Valuation: What is Cascades 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 Cascades 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 Cascades’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.

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