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Market Sentiment Around Loss-Making BluGlass Limited (ASX:BLG)

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·3 min read
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With the business potentially at an important milestone, we thought we'd take a closer look at BluGlass Limited's (ASX:BLG) future prospects. BluGlass Limited, together with its subsidiaries, engages in the research and development of Gallium nitrides in Australia. On 30 June 2020, the AU$59m market-cap company posted a loss of AU$6.0m for its most recent financial year. As path to profitability is the topic on BluGlass' 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.

Check out our latest analysis for BluGlass

According to some industry analysts covering BluGlass, breakeven is near. They anticipate the company to incur a final loss in 2021, before generating positive profits of AU$429k in 2022. The company is therefore projected to breakeven just over a year from today. 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 90%, which is rather optimistic! If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.

earnings-per-share-growth
earnings-per-share-growth

Underlying developments driving BluGlass' growth isn’t the focus of this broad overview, but, keep in mind that typically 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 BluGlass has no debt on its balance sheet, which is quite unusual for a cash-burning growth company, which typically has high debt relative to its equity. The company currently operates purely off its shareholder funding and has no debt obligation, reducing concerns around repayments and making it a less risky investment.

Next Steps:

There are key fundamentals of BluGlass 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 BluGlass, take a look at BluGlass' company page on Simply Wall St. We've also put together a list of pertinent factors you should look at:

  1. Historical Track Record: What has BluGlass' 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.

  2. Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on BluGlass' board and the CEO’s background.

  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.

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. 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.