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With the business potentially at an important milestone, we thought we'd take a closer look at Horizon North Logistics Inc.'s (TSE:HNL) future prospects. Horizon North Logistics Inc. provides industrial, commercial, and residential products and services in Canada. The CA$331m market-cap company posted a loss in its most recent financial year of CA$84.8m and a latest trailing-twelve-month loss of CA$41.1m shrinking the gap between loss and breakeven. As path to profitability is the topic on Horizon North Logistics' 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.
View our latest analysis for Horizon North Logistics
Consensus from 8 of the Canadian Commercial Services analysts is that Horizon North Logistics is on the verge of breakeven. They expect the company to post a final loss in 2019, before turning a profit of CA$45m in 2020. Therefore, the company is expected to breakeven roughly 12 months from now or less. How fast will the company have to grow to reach the consensus forecasts that anticipate breakeven by 2020? Working backwards from analyst estimates, it turns out that they expect the company to grow -5.5% year-on-year, on average,
We're not going to go through company-specific developments for Horizon North Logistics given that this is a high-level summary, but, take into account that generally periods of lower growth in the upcoming years 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 Horizon North Logistics is its relatively high level of debt. Generally, the rule of thumb is debt shouldn’t exceed 40% of your equity, which in Horizon North Logistics' case is 42%. A higher level of debt requires more stringent capital management which increases the risk around investing in the loss-making company.
Next Steps:
There are key fundamentals of Horizon North Logistics which are not covered in this article, but we must stress again that this is merely a basic overview. For a more comprehensive look at Horizon North Logistics, take a look at Horizon North Logistics' company page on Simply Wall St. We've also compiled a list of relevant factors you should further examine:
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Valuation: What is Horizon North Logistics 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 Horizon North Logistics is currently mispriced by the market.
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Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Horizon North Logistics’s board and the CEO’s background.
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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.
This article by Simply Wall St is general in nature. 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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