Gevo, Inc. (NASDAQ:GEVO): Are Analysts Optimistic?
We feel now is a pretty good time to analyse Gevo, Inc.'s (NASDAQ:GEVO) business as it appears the company may be on the cusp of a considerable accomplishment. Gevo, Inc. operates as a renewable fuels company. The US$269m market-cap company announced a latest loss of US$98m on 31 December 2022 for its most recent financial year result. The most pressing concern for investors is Gevo's path to profitability – when will it breakeven? We've put together a brief outline of industry analyst expectations for the company, its year of breakeven and its implied growth rate.
View our latest analysis for Gevo
Gevo is bordering on breakeven, according to the 4 American Oil and Gas analysts. They expect the company to post a final loss in 2024, before turning a profit of US$209m in 2025. Therefore, the company is expected to breakeven roughly 2 years from now. In order to meet this breakeven date, we calculated the rate at which the company must grow year-on-year. It turns out an average annual growth rate of 52% is expected, which is extremely buoyant. 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 Gevo given that this is a high-level summary, though, keep in mind that typically energy companies, depending on the stage of operation and resource produced, have irregular periods of cash flow. So, a high growth rate is not out of the ordinary, particularly when a company is in a period of investment.
Before we wrap up, there’s one aspect worth mentioning. The company has managed its capital prudently, with debt making up 11% 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.
Next Steps:
This article is not intended to be a comprehensive analysis on Gevo, so if you are interested in understanding the company at a deeper level, take a look at Gevo's company page on Simply Wall St. We've also put together a list of essential aspects you should further examine:
Historical Track Record: What has Gevo'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 Gevo'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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