Cree Inc’s (NASDAQ:CREE): Cree, Inc. provides lighting-class light emitting diode (LED), lighting, and semiconductor products for power and radio-frequency (RF) applications in the United States, China, Europe, South Korea, Japan, Malaysia, Taiwan, and internationally. The US$4.2b market-cap company’s loss lessens since it announced a -US$280.0m bottom-line in the full financial year, compared to the latest trailing-twelve-month loss of -US$271.2m, as it approaches breakeven. Many investors are wondering the rate at which CREE 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 CREE, its year of breakeven and its implied growth rate.
CREE is bordering on breakeven, according to the 11 Semiconductor analysts. They expect the company to post a final loss in 2019, before turning a profit of US$57m in 2020. CREE is therefore projected to breakeven around 2 years from today. What rate will CREE 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 70%, which signals high confidence from analysts. Should the business grow at a slower rate, it will become profitable at a later date than expected.
Given this is a high-level overview, I won’t go into details of CREE’s upcoming projects, though, keep in mind that typically 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 aspect worth mentioning. CREE has managed its capital judiciously, with debt making up 21% of equity. This means that CREE 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 too many aspects of CREE to cover in one brief article, but the key fundamentals for the company can all be found in one place – CREE’s company page on Simply Wall St. I’ve also put together a list of important factors you should look at:
- Valuation: What is CREE 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 CREE 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 Cree’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 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 firstname.lastname@example.org.