We feel now is a pretty good time to analyse Loop Industries, Inc.'s (NASDAQ:LOOP) business as it appears the company may be on the cusp of a considerable accomplishment. Loop Industries, Inc., a technology company, focuses on depolymerizing waste polyethylene terephthalate PET plastics and polyester fibers, including plastic bottles, packaging, carpets and textiles of any color, transparency and even ocean plastics that have been degraded by the sun and salt, to its base building blocks. The US$133m market-cap company’s loss lessened since it announced a US$21m loss in the full financial year, compared to the latest trailing-twelve-month loss of US$10m, as it approaches breakeven. The most pressing concern for investors is Loop Industries' 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.
Loop Industries is bordering on breakeven, according to the 3 American Chemicals analysts. They expect the company to post a final loss in 2025, before turning a profit of US$30m in 2026. The company is therefore projected to breakeven around 3 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 58% is expected, which signals high confidence from analysts. 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 Loop Industries given that this is a high-level summary, 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’d like to point out is that The company has managed its capital prudently, with debt making up 12% 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.
There are key fundamentals of Loop Industries 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 Loop Industries, take a look at Loop Industries' company page on Simply Wall St. We've also compiled a list of important factors you should further research:
Valuation: What is Loop Industries 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 Loop Industries 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 Loop Industries’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.