Melrose Industries PLC’s (LON:MRO) Shift From Loss To Profit
Melrose Industries PLC’s (LSE:MRO): Melrose Industries PLC, together with its subsidiaries, designs and manufactures electricity generating equipment for the power generation, industrial, oil and gas, and offshore sectors in the United Kingdom, Europe, North America, and internationally. The UK£4.35B market-cap company announced a latest loss of -UK£23.90M on 31 December 2017 for its most recent financial year result. The most pressing concern for investors is MRO’s path to profitability – when will it breakeven? Below I will provide a high-level summary of the industry analysts’ expectations for MRO.
See our latest analysis for Melrose Industries
According to the industry analysts covering MRO, breakeven is near. They expect the company to post a final loss in 2017, before turning a profit of UK£123.83M in 2018. Therefore, MRO is expected to breakeven roughly a few months from now. How fast will MRO have to grow each year in order to reach the breakeven point by 2018? Working backwards from analyst estimates, it turns out that they expect the company to grow 51.78% year-on-year, on average, which is extremely buoyant. If this rate turns out to be too aggressive, MRO may become profitable much later than analysts predict.
Given this is a high-level overview, I won’t go into detail the detail of MRO’s upcoming projects, but, keep in mind that typically 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 aspect worth mentioning. MRO has managed its capital judiciously, with debt making up 31.20% of equity. This means that MRO 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 too many aspects of MRO to cover in one brief article, but the key fundamentals for the company can all be found in one place – MRO’s company page on Simply Wall St. I’ve also put together a list of important aspects you should further research:
Valuation: What is MRO 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 MRO 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 Melrose Industries’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.
To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned.
