AFC Energy plc (LON:AFC): Are Analysts Optimistic?
AFC Energy plc’s (AIM:AFC): AFC Energy plc develops and demonstrates alkaline fuel cell systems in the United Kingdom and Germany. The UK£38.93M market-cap company announced a latest loss of -UK£4.93M on 31 October 2017 for its most recent financial year result. Many investors are wondering the rate at which AFC will turn a profit, with the big question being “when will the company breakeven?” In this article, I will touch on the expectations for AFC’s growth and when analysts expect the company to become profitable.
Check out our latest analysis for AFC Energy
Expectation from analysts is AFC is on the verge of breakeven. They expect the company to post a final loss in 2019, before turning a profit of UK£3.80M in 2020. Therefore, AFC is expected to breakeven roughly 2 years from now. How fast will AFC have to grow each year in order to reach the breakeven point by 2020? Working backwards from analyst estimates, it turns out that they expect the company to grow 67.44% year-on-year, on average, which is extremely buoyant. Should the business grow at a slower rate, it will become profitable at a later date than expected.
I’m not going to go through company-specific developments for AFC given that this is a high-level summary, though, bear in mind that by and large a high forecast growth rate is not unusual for a company that is currently undergoing an investment period.
Before I wrap up, there’s one aspect worth mentioning. AFC has managed its capital judiciously, with debt making up 0.22% of equity. This means that AFC 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 AFC, so if you are interested in understanding the company at a deeper level, take a look at AFC’s company page on Simply Wall St. I’ve also compiled a list of key aspects you should further research:
Historical Track Record: What has AFC’s performance been like over the past? Go into more detail in the past track record analysis and take a look at the free visual representations of our analysis for more clarity.
Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on AFC Energy’s board and the CEO’s back ground.
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.
To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned.
