REC Silicon ASA’s (OB:REC): REC Silicon ASA, together with its subsidiaries, produces and sells silicon materials for the solar and electronics industries worldwide. With the latest financial year loss of -US$367.00M and a trailing-twelve month of -US$289.30M, the ØRE3.48B market-cap alleviates its loss by moving closer towards its target of breakeven. Many investors are wondering the rate at which REC will turn a profit, with the big question being “when will the company breakeven?” In this article, I will touch on the expectations for REC’s growth and when analysts expect the company to become profitable.
Expectation from analysts is REC is on the verge of breakeven. They anticipate the company to incur a final loss in 2017, before generating positive profits of US$20.25M in 2018. Therefore, REC is expected to breakeven roughly a couple of months from now! How fast will REC have to grow each year in order to reach the breakeven point by 2018? Working backwards from analyst estimates, it turns out that they expect the company to grow 28.44% 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.
Underlying developments driving REC’s growth isn’t the focus of this broad overview, but, keep in mind that generally 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. REC has managed its capital judiciously, with debt making up 37.97% of equity. This means that REC has predominantly funded its operations from equity capital, and its low debt obligation reduces the risk around investing in the loss-making company.
There are key fundamentals of REC which are not covered in this article, but I must stress again that this is merely a basic overview. For a more comprehensive look at REC, take a look at REC’s company page on Simply Wall St. I’ve also put together a list of essential aspects you should look at:
- Historical Track Record: What has REC’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 REC Silicon’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.