Loop Industries, Inc.'s (NASDAQ:LOOP) Shift From Loss To Profit
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$163m 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$11m, as it approaches breakeven. The most pressing concern for investors is Loop Industries' path to profitability – when will it breakeven? Below we will provide a high-level summary of the industry analysts’ expectations for the company.
View our latest analysis for Loop Industries
According to the 3 industry analysts covering Loop Industries, the consensus is that breakeven is near. They anticipate the company to incur a final loss in 2025, before generating positive profits of US$31m in 2026. Therefore, the company is expected to breakeven roughly 2 years from now. What rate will the company have to grow year-on-year in order to breakeven on this date? Using a line of best fit, we calculated an average annual growth rate of 64%, 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 Loop Industries' growth isn’t the focus of this broad overview, but, keep in mind that by and large 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 judiciously, with debt making up 18% 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:
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 key factors you should look at:
Historical Track Record: What has Loop Industries' 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 Loop Industries' 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.
