Green Plains Inc.'s (NASDAQ:GPRE) Profit Outlook
With the business potentially at an important milestone, we thought we'd take a closer look at Green Plains Inc.'s (NASDAQ:GPRE) future prospects. Green Plains Inc. produces low-carbon fuels in the United States and internationally. With the latest financial year loss of US$127m and a trailing-twelve-month loss of US$136m, the US$2.0b market-cap company amplified its loss by moving further away from its breakeven target. The most pressing concern for investors is Green Plains' path to profitability – when will it breakeven? In this article, we will touch on the expectations for the company's growth and when analysts expect it to become profitable.
View our latest analysis for Green Plains
Green Plains is bordering on breakeven, according to the 10 American Oil and Gas analysts. They expect the company to post a final loss in 2023, before turning a profit of US$142m in 2024. So, the company is predicted to breakeven just over a year 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 104% year-on-year, on average, which signals high confidence from analysts. Should the business grow at a slower rate, it will become profitable at a later date than expected.
We're not going to go through company-specific developments for Green Plains 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.
One thing we would like to bring into light with Green Plains is its relatively high level of debt. Typically, debt shouldn’t exceed 40% of your equity, which in Green Plains' case is 73%. Note that a higher debt obligation increases the risk around investing in the loss-making company.
Next Steps:
There are too many aspects of Green Plains to cover in one brief article, but the key fundamentals for the company can all be found in one place – Green Plains' company page on Simply Wall St. We've also put together a list of important factors you should look at:
Valuation: What is Green Plains 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 Green Plains 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 Green Plains’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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