Analysts Expect H2O Innovation Inc. (CVE:HEO) To Breakeven Soon
With the business potentially at an important milestone, we thought we'd take a closer look at H2O Innovation Inc.'s (CVE:HEO) future prospects. H2O Innovation Inc. provides integrated water treatment solutions based on membrane filtration technology. On 30 June 2020, the CA$144m market-cap company posted a loss of CA$4.2m for its most recent financial year. As path to profitability is the topic on H2O Innovation's investors mind, we've decided to gauge market sentiment. In this article, we will touch on the expectations for the company's growth and when analysts expect it to become profitable.
View our latest analysis for H2O Innovation
Consensus from 5 of the Canadian Machinery analysts is that H2O Innovation is on the verge of breakeven. They expect the company to post a final loss in 2020, before turning a profit of CA$2.3m in 2021. Therefore, the company is expected to breakeven roughly a year 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 124% is expected, 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 H2O Innovation given that this is a high-level summary, but, 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 29% 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 H2O Innovation, so if you are interested in understanding the company at a deeper level, take a look at H2O Innovation's company page on Simply Wall St. We've also put together a list of relevant aspects you should further examine:
Valuation: What is H2O Innovation 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 H2O Innovation 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 H2O Innovation’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.
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.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com.
