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When Will Aspen Aerogels, Inc. (NYSE:ASPN) Become Profitable?

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Aspen Aerogels, Inc.'s (NYSE:ASPN): Aspen Aerogels, Inc., an aerogel technology company, designs, develops, manufactures, and sells aerogel insulation products primarily for use in the energy infrastructure and building materials markets worldwide. The US$221m market-cap company announced a latest loss of -US$14.6m on 31 December 2019 for its most recent financial year result. As path to profitability is the topic on ASPN’s investors mind, I’ve decided to gauge market sentiment. I’ve put together a brief outline of industry analyst expectations for ASPN, its year of breakeven and its implied growth rate.

See our latest analysis for Aspen Aerogels

Consensus from the 5 Energy Services analysts is ASPN is on the verge of breakeven. They anticipate the company to incur a final loss in 2020, before generating positive profits of US$69k in 2021. So, ASPN is predicted to breakeven approximately a couple of months from now! What rate will ASPN have to grow year-on-year in order to breakeven on this date? Using a line of best fit, I calculated an average annual growth rate of 65%, which signals high confidence from analysts. Should the business grow at a slower rate, it will become profitable at a later date than expected.

NYSE:ASPN Past and Future Earnings, March 4th 2020
NYSE:ASPN Past and Future Earnings, March 4th 2020

I’m not going to go through company-specific developments for ASPN given that this is a high-level summary, though, take into account that generally an energy business has lumpy cash flows which are contingent on the natural resource and stage at which the company is operating. So, a high growth rate is not out of the ordinary, particularly when a company is in a period of investment.

One thing I’d like to point out is that ASPN has managed its capital prudently, with debt making up 5.3% of equity. This means that ASPN 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 ASPN, so if you are interested in understanding the company at a deeper level, take a look at ASPN’s company page on Simply Wall St. I’ve also put together a list of key aspects you should further examine:

  1. Valuation: What is ASPN 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 ASPN 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 Aspen Aerogels’s board and the CEO’s back ground.

  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.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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. Simply Wall St has no position in the stocks mentioned.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.