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With the business potentially at an important milestone, we thought we'd take a closer look at The Lion Electric Company's (TSE:LEV) future prospects. The Lion Electric Company manufactures all-electric medium and heavy-duty urban vehicles in North America. With the latest financial year loss of US$97m and a trailing-twelve-month loss of US$123m, the CA$2.2b market-cap company amplified its loss by moving further away from its breakeven target. The most pressing concern for investors is Lion Electric's path to profitability – when will it breakeven? Below we will provide a high-level summary of the industry analysts’ expectations for the company.
Lion Electric is bordering on breakeven, according to the 7 Canadian Machinery analysts. They anticipate the company to incur a final loss in 2022, before generating positive profits of US$33m in 2023. Therefore, the company is expected to breakeven roughly 2 years from now. How fast will the company have to grow each year in order to reach the breakeven point by 2023? Working backwards from analyst estimates, it turns out that they expect the company to grow 76% year-on-year, on average, which signals high confidence from analysts. If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.
We're not going to go through company-specific developments for Lion Electric given that this is a high-level summary, but, bear in mind that generally a high forecast growth rate is not unusual for a company that is currently undergoing an investment period.
Before we wrap up, there’s one aspect worth mentioning. The company has managed its capital judiciously, with debt making up 4.0% of equity. This means that it 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 Lion Electric to cover in one brief article, but the key fundamentals for the company can all be found in one place – Lion Electric's company page on Simply Wall St. We've also compiled a list of important factors you should further examine:
Valuation: What is Lion Electric 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 Lion Electric 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 Lion Electric’s board and the CEO’s background.
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.
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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.