When Can We Expect A Profit From Redwire Corporation (NYSE:RDW)?
With the business potentially at an important milestone, we thought we'd take a closer look at Redwire Corporation's (NYSE:RDW) future prospects. Redwire Corporation, a space infrastructure company, develops, manufactures, and sells mission critical space solutions and components for national security, civil, and commercial space markets in the United States, Luxembourg, Germany, South Korea, Poland, and internationally. The company’s loss has recently broadened since it announced a US$62m loss in the full financial year, compared to the latest trailing-twelve-month loss of US$71m, moving it further away from breakeven. Many investors are wondering about the rate at which Redwire will turn a profit, with the big question being “when will the company breakeven?” We've put together a brief outline of industry analyst expectations for the company, its year of breakeven and its implied growth rate.
See our latest analysis for Redwire
Expectations from some of the American Aerospace & Defense analysts is that Redwire is on the verge of breakeven. They expect the company to post a final loss in 2023, before turning a profit of US$38m in 2024. 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 2024? Working backwards from analyst estimates, it turns out that they expect the company to grow 88% year-on-year, on average, which is rather optimistic! Should the business grow at a slower rate, it will become profitable at a later date than expected.
Underlying developments driving Redwire's growth isn’t the focus of this broad overview, though, take into account that by and large 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 Redwire is its relatively high level of debt. Generally, the rule of thumb is debt shouldn’t exceed 40% of your equity, which in Redwire's case is 82%. A higher level of debt requires more stringent capital management which increases the risk in investing in the loss-making company.
Next Steps:
This article is not intended to be a comprehensive analysis on Redwire, so if you are interested in understanding the company at a deeper level, take a look at Redwire's company page on Simply Wall St. We've also compiled a list of essential aspects you should look at:
Historical Track Record: What has Redwire'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.
Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Redwire'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.
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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