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Hydrogenics Corporation's (NASDAQ:HYGS): Hydrogenics Corporation, together with its subsidiaries, designs, develops, and manufactures hydrogen generation products based on water electrolysis technology; and fuel cell products based on proton exchange membrane (PEM) technology. With the latest financial year loss of -US$13.3m and a trailing-twelve month of -US$14.0m, the US$201m market-cap amplifies its loss by moving further away from its breakeven target. As path to profitability is the topic on HYGS’s investors mind, I’ve decided to gauge market sentiment. I’ve put together a brief outline of industry analyst expectations for HYGS, its year of breakeven and its implied growth rate.
According to the 4 industry analysts covering HYGS, the consensus is breakeven is near. They anticipate the company to incur a final loss in 2019, before generating positive profits of US$522k in 2020. So, HYGS is predicted to breakeven approximately a few months from now. How fast will HYGS have to grow each year in order to reach the breakeven point by 2020? Working backwards from analyst estimates, it turns out that they expect the company to grow 65% year-on-year, on average, which is rather optimistic! If this rate turns out to be too aggressive, HYGS may become profitable much later than analysts predict.
I’m not going to go through company-specific developments for HYGS given that this is a high-level summary, though, keep in mind that generally a high forecast growth rate is not unusual for a company that is currently undergoing an investment period.
Before I wrap up, there’s one issue worth mentioning. HYGS currently has a relatively high level of debt. Generally, the rule of thumb is debt shouldn’t exceed 40% of your equity, which in HYGS’s case is 42%. Note that a higher debt obligation increases the risk in investing in the loss-making company.
There are too many aspects of HYGS to cover in one brief article, but the key fundamentals for the company can all be found in one place – HYGS’s company page on Simply Wall St. I’ve also compiled a list of relevant aspects you should look at:
- Valuation: What is HYGS 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 HYGS 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 Hydrogenics’s board and the CEO’s back ground.
- 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.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. 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. Thank you for reading.