With the business potentially at an important milestone, we thought we'd take a closer look at Hydrofarm Holdings Group, Inc.'s (NASDAQ:HYFM) future prospects. Hydrofarm Holdings Group, Inc., together with its subsidiaries, engages in the manufacture and distribution of controlled environment agriculture (CEA) equipment and supplies in the United States and Canada. With the latest financial year loss of US$9.9m and a trailing-twelve-month loss of US$839k, the US$2.1b market-cap company alleviated its loss by moving closer towards its target of breakeven. As path to profitability is the topic on Hydrofarm Holdings Group's investors mind, we've decided to gauge market sentiment. Below we will provide a high-level summary of the industry analysts’ expectations for the company.

See our latest analysis for Hydrofarm Holdings Group

Hydrofarm Holdings Group is bordering on breakeven, according to the 5 American Machinery analysts. They expect the company to post a final loss in 2020, before turning a profit of US$33m in 2021. 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 71% is expected, which is extremely buoyant. 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 Hydrofarm Holdings Group's upcoming projects, however, bear 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 aspect worth mentioning. The company has managed its capital prudently, with debt making up 0.3% 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 Hydrofarm Holdings Group, so if you are interested in understanding the company at a deeper level, take a look at Hydrofarm Holdings Group's company page on Simply Wall St. We've also compiled a list of relevant aspects you should further examine:

1. Valuation: What is Hydrofarm Holdings Group 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 Hydrofarm Holdings Group 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 Hydrofarm Holdings Group’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.

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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