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Capstone Turbine Corporation (NASDAQ:CPST): Is Breakeven Near?

Capstone Turbine Corporation’s (NASDAQ:CPST): Capstone Turbine Corporation develops, manufactures, markets, and services microturbine technology solutions for use in stationary distributed power generation applications worldwide. The US$40m market-cap posted a loss in its most recent financial year of -US$10.0m and a latest trailing-twelve-month loss of -US$11.5m leading to an even wider gap between loss and breakeven. Many investors are wondering the rate at which CPST will turn a profit, with the big question being “when will the company breakeven?” Below I will provide a high-level summary of the industry analysts’ expectations for CPST.

Check out our latest analysis for Capstone Turbine

CPST is bordering on breakeven, according to the 6 Electrical analysts. They expect the company to post a final loss in 2020, before turning a profit of US$3.9m in 2021. CPST is therefore projected to breakeven around 3 years from now. How fast will CPST 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 78% year-on-year, on average, which signals high confidence from analysts. If this rate turns out to be too aggressive, CPST may become profitable much later than analysts predict.

NasdaqCM:CPST Past Future Earnings December 24th 18
NasdaqCM:CPST Past Future Earnings December 24th 18

Underlying developments driving CPST’s growth isn’t the focus of this broad overview, though, keep in mind that generally a high growth rate is not out of the ordinary, particularly when a company is in a period of investment.

Before I wrap up, there’s one issue worth mentioning. CPST currently has a relatively high level of debt. Typically, debt shouldn’t exceed 40% of your equity, which in CPST’s case is 51%. A higher level of debt requires more stringent capital management which increases the risk in investing in the loss-making company.

Next Steps:

There are too many aspects of CPST to cover in one brief article, but the key fundamentals for the company can all be found in one place – CPST’s company page on Simply Wall St. I’ve also compiled a list of key aspects you should further examine:

  1. Valuation: What is CPST 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 CPST 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 Capstone Turbine’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.

To help readers see past 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. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.

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