Lightning eMotors, Inc. (NYSE:ZEV): When Will It Breakeven?
With the business potentially at an important milestone, we thought we'd take a closer look at Lightning eMotors, Inc.'s (NYSE:ZEV) future prospects. Lightning eMotors, Inc. designs, manufactures, and sells zero-emission commercial fleet vehicles and powertrains to commercial fleets, large enterprises, original equipment manufacturers, and governments in the United States. On 31 December 2021, the US$332m market-cap company posted a loss of US$101m for its most recent financial year. As path to profitability is the topic on Lightning eMotors' 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 Lightning eMotors
Consensus from 5 of the American Machinery analysts is that Lightning eMotors 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. 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 73% is expected, which signals high confidence from analysts. Should the business grow at a slower rate, it will become profitable at a later date than expected.
Underlying developments driving Lightning eMotors' growth isn’t the focus of this broad overview, however, bear in mind 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 Lightning eMotors is its debt-to-equity ratio of over 2x. Generally, the rule of thumb is 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 in investing in the loss-making company.
Next Steps:
This article is not intended to be a comprehensive analysis on Lightning eMotors, so if you are interested in understanding the company at a deeper level, take a look at Lightning eMotors' company page on Simply Wall St. We've also compiled a list of key factors you should further research:
Valuation: What is Lightning eMotors 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 Lightning eMotors 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 Lightning eMotors’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.
