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We feel now is a pretty good time to analyse LSB Industries, Inc.'s (NYSE:LXU) business as it appears the company may be on the cusp of a considerable accomplishment. LSB Industries, Inc. engages in the manufacture, marketing, and sale of chemical products. With the latest financial year loss of US$220m and a trailing-twelve-month loss of US$47m, the US$1.2b market-cap company alleviated its loss by moving closer towards its target of breakeven. The most pressing concern for investors is LSB Industries' path to profitability – when will it breakeven? Below we will provide a high-level summary of the industry analysts’ expectations for the company.
According to the 2 industry analysts covering LSB Industries, the consensus is that breakeven is near. They anticipate the company to incur a final loss in 2021, before generating positive profits of US$203m in 2022. The company is therefore projected to breakeven around a year from now or less! At what rate will the company have to grow in order to realise the consensus estimates forecasting breakeven in under 12 months? Using a line of best fit, we calculated an average annual growth rate of 69%, which signals high confidence from analysts. Should the business grow at a slower rate, it will become profitable at a later date than expected.
Given this is a high-level overview, we won’t go into details of LSB Industries' upcoming projects, but, 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 LSB Industries is its debt-to-equity ratio of 118%. Generally, the rule of thumb is debt shouldn’t exceed 40% of your equity, and the company has considerably exceeded this. Note that a higher debt obligation increases the risk around investing in the loss-making company.
This article is not intended to be a comprehensive analysis on LSB Industries, so if you are interested in understanding the company at a deeper level, take a look at LSB Industries' company page on Simply Wall St. We've also compiled a list of pertinent factors you should further research:
Valuation: What is LSB 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 LSB 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 LSB 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.
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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