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When Can We Expect A Profit From Genex Power Limited (ASX:GNX)?

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·3 min read
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With the business potentially at an important milestone, we thought we'd take a closer look at Genex Power Limited's (ASX:GNX) future prospects. Genex Power Limited engages in the generation and storage of renewable energy in Australia. The company’s loss has recently broadened since it announced a AU$19m loss in the full financial year, compared to the latest trailing-twelve-month loss of AU$20m, moving it further away from breakeven. As path to profitability is the topic on Genex Power's investors mind, we've decided to gauge market sentiment. We've put together a brief outline of industry analyst expectations for the company, its year of breakeven and its implied growth rate.

Check out our latest analysis for Genex Power

Consensus from 3 of the Australian Renewable Energy analysts is that Genex Power is on the verge of breakeven. They anticipate the company to incur a final loss in 2024, before generating positive profits of AU$17m in 2025. Therefore, the company is expected to breakeven roughly 3 years from today. What rate will the company have to grow year-on-year in order to breakeven on this date? Using a line of best fit, we calculated an average annual growth rate of 23%, which is extremely buoyant. If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.

earnings-per-share-growth
earnings-per-share-growth

Underlying developments driving Genex Power's growth isn’t the focus of this broad overview, however, take into account that generally a high forecast growth rate is not unusual for a company that is currently undergoing an investment period.

One thing we would like to bring into light with Genex Power 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 this case, the company has significantly overshot. Note that a higher debt obligation increases the risk in investing in the loss-making company.

Next Steps:

There are key fundamentals of Genex Power which are not covered in this article, but we must stress again that this is merely a basic overview. For a more comprehensive look at Genex Power, take a look at Genex Power's company page on Simply Wall St. We've also put together a list of relevant factors you should further examine:

  1. Historical Track Record: What has Genex Power'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.

  2. Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Genex Power's board and the CEO’s background.

  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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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