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Market Sentiment Around Loss-Making Nel ASA (OB:NEL)

Simply Wall St

Nel ASA's (OB:NEL): Nel ASA, a hydrogen company, delivers various solutions to produce, store, and distribute hydrogen from renewable energy worldwide. The company’s loss has recently broadened since it announced a -kr188.8m loss in the full financial year, compared to the latest trailing-twelve-month loss of -kr230.9m, moving it further away from breakeven. The most pressing concern for investors is NEL’s path to profitability – when will it breakeven? Below I will provide a high-level summary of the industry analysts’ expectations for NEL.

Check out our latest analysis for Nel

NEL is bordering on breakeven, according to the 3 Electrical analysts. They anticipate the company to incur a final loss in 2020, before generating positive profits of kr4.3m in 2021. NEL is therefore projected to breakeven around 2 years from now. How fast will NEL have to grow each year in order to reach the breakeven point by 2021? Working backwards from analyst estimates, it turns out that they expect the company to grow 92% year-on-year, on average, which is extremely buoyant. Should the business grow at a slower rate, it will become profitable at a later date than expected.

OB:NEL Past and Future Earnings, December 6th 2019

Given this is a high-level overview, I won’t go into details of NEL’s upcoming projects, though, keep 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 I’d like to point out is that NEL has managed its capital prudently, with debt making up 1.6% of equity. This means that NEL 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 NEL which are not covered in this article, but I must stress again that this is merely a basic overview. For a more comprehensive look at NEL, take a look at NEL’s company page on Simply Wall St. I’ve also put together a list of pertinent factors you should look at:

  1. Valuation: What is NEL 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 NEL is currently mispriced by the market.
  2. Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Nel’s board and the CEO’s back ground.
  3. 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.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned.

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