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We Might See A Profit From Top Ships Inc. (NASDAQ:TOPS) Soon

Top Ships Inc. (NASDAQ:TOPS) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. Top Ships Inc. owns and operates tanker vessels worldwide. With the latest financial year loss of US$29m and a trailing-twelve-month loss of US$20m, the US$43m market-cap company alleviated its loss by moving closer towards its target of breakeven. The most pressing concern for investors is Top Ships' path to profitability – when will it breakeven? We've put together a brief outline of industry analyst expectations for the company, its year of breakeven and its implied growth rate.

Check out our latest analysis for Top Ships

According to some industry analysts covering Top Ships, breakeven is near. They expect the company to post a final loss in 2021, before turning a profit of US$18m in 2022. Therefore, the company is expected to breakeven roughly 12 months from now or less. How fast will the company have to grow to reach the consensus forecasts that anticipate breakeven by 2022? Working backwards from analyst estimates, it turns out that they expect the company to grow 59% year-on-year, on average, which signals high confidence from analysts. Should the business grow at a slower rate, it will become profitable at a later date than expected.

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

We're not going to go through company-specific developments for Top Ships given that this is a high-level summary, though, take into account that generally energy companies, depending on the stage of operation and resource produced, have irregular periods of cash flow. This means that a high growth rate is not unusual, especially if the company is currently in an investment period.

Before we wrap up, there’s one issue worth mentioning. Top Ships currently has a debt-to-equity ratio of 124%. Typically, debt shouldn’t exceed 40% of your equity, which in this case, the company has significantly overshot. Note that a higher debt obligation increases the risk in investing in the loss-making company.

Next Steps:

There are too many aspects of Top Ships to cover in one brief article, but the key fundamentals for the company can all be found in one place – Top Ships' company page on Simply Wall St. We've also compiled a list of key factors you should further examine:

  1. Historical Track Record: What has Top Ships' 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 Top Ships' 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.

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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