Innergex Renewable Energy Inc. (TSE:INE) Has Found A Path To Profitability
With the business potentially at an important milestone, we thought we'd take a closer look at Innergex Renewable Energy Inc.'s (TSE:INE) future prospects. Innergex Renewable Energy Inc. operates as an independent renewable power producer in Canada, the United States, France, and Chile. The CA$2.1b market-cap company posted a loss in its most recent financial year of CA$87m and a latest trailing-twelve-month loss of CA$21m shrinking the gap between loss and breakeven. As path to profitability is the topic on Innergex Renewable Energy's investors mind, we've decided to gauge market sentiment. Below we will provide a high-level summary of the industry analysts’ expectations for the company.
See our latest analysis for Innergex Renewable Energy
According to the 8 industry analysts covering Innergex Renewable Energy, the consensus is that breakeven is near. They anticipate the company to incur a final loss in 2022, before generating positive profits of CA$21m in 2023. Therefore, the company is expected to breakeven roughly a year from now or less! We calculated the rate at which the company must grow to meet the consensus forecasts predicting breakeven within 12 months. It turns out an average annual growth rate of 68% is expected, which is rather optimistic! If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.
Underlying developments driving Innergex Renewable Energy's growth isn’t the focus of this broad overview, though, take into account that typically 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 Innergex Renewable Energy is its debt-to-equity ratio of over 2x. Typically, debt shouldn’t exceed 40% of your equity, which in this case, the company has significantly overshot. A higher level of debt requires more stringent capital management which increases the risk around investing in the loss-making company.
Next Steps:
There are key fundamentals of Innergex Renewable Energy 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 Innergex Renewable Energy, take a look at Innergex Renewable Energy's company page on Simply Wall St. We've also put together a list of key factors you should further research:
Valuation: What is Innergex Renewable Energy 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 Innergex Renewable Energy 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 Innergex Renewable Energy’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.
