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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. On 31 March 2019, the US$57m market-cap posted a loss of -US$16.7m for its most recent financial year. Many investors are wondering the rate at which CPST will turn a profit, with the big question being “when will the company breakeven?” In this article, I will touch on the expectations for CPST’s growth and when analysts expect the company to become profitable.
Consensus from the 6 Electrical analysts is CPST is on the verge of breakeven. They expect the company to post a final loss in 2021, before turning a profit of US$5.3m in 2022. Therefore, CPST is expected to breakeven roughly 3 years from now. In order to meet this breakeven date, I calculated the rate at which CPST must grow year-on-year. It turns out an average annual growth rate of 65% is expected, which is rather optimistic! If this rate turns out to be too aggressive, CPST may become profitable much later than analysts predict.
Given this is a high-level overview, I won’t go into details of CPST’s upcoming projects, but, take into account 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 debt-to-equity ratio of 118%. Typically, debt shouldn’t exceed 40% of your equity, and CPST has considerably exceeded this. A higher level of debt requires more stringent capital management which increases the risk around investing in the loss-making company.
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 look at:
- 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.
- 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.
- 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 email@example.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.