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Breakeven On The Horizon For BioHiTech Global, Inc. (NASDAQ:BHTG)

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BioHiTech Global, Inc.'s (NASDAQ:BHTG): BioHiTech Global, Inc., through its subsidiaries, provides technological, biological, and mechanical engineering solutions for the control, reduction, and/or reuse of organic and municipal waste worldwide. The US$30m market-cap company’s loss lessens since it announced a -US$15.2m bottom-line in the full financial year, compared to the latest trailing-twelve-month loss of -US$8.5m, as it approaches breakeven. Many investors are wondering the rate at which BHTG will turn a profit, with the big question being “when will the company breakeven?” I’ve put together a brief outline of industry analyst expectations for BHTG, its year of breakeven and its implied growth rate.

See our latest analysis for BioHiTech Global

BHTG is bordering on breakeven, according to the 3 Commercial Services analysts. They anticipate the company to incur a final loss in 2020, before generating positive profits of US$3.2m in 2021. BHTG is therefore projected to breakeven around 2 years from today. How fast will BHTG have to grow each year in order to reach the breakeven point by 2021? Working backwards from analyst estimates, it turns out that they expect the company to grow 109% year-on-year, on average, which signals high confidence from analysts. If this rate turns out to be too aggressive, BHTG may become profitable much later than analysts predict.

NasdaqCM:BHTG Past and Future Earnings, November 12th 2019
NasdaqCM:BHTG Past and Future Earnings, November 12th 2019

I’m not going to go through company-specific developments for BHTG given that this is a high-level summary, though, take into account that by and large a high growth rate is not out of the ordinary, particularly when a company is in a period of investment.

One thing I would like to bring into light with BHTG is its debt-to-equity ratio of over 2x. Generally, the rule of thumb is debt shouldn’t exceed 40% of your equity, which in BHTG’s case, it has significantly overshot. A higher level of debt requires more stringent capital management which increases the risk in investing in the loss-making company.

Next Steps:

This article is not intended to be a comprehensive analysis on BHTG, so if you are interested in understanding the company at a deeper level, take a look at BHTG’s company page on Simply Wall St. I’ve also compiled a list of essential aspects you should further research:

  1. Valuation: What is BHTG 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 BHTG 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 BioHiTech Global’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.

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.

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. Thank you for reading.