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MPC Container Ships ASA's (OB:MPCC) Shift From Loss To Profit

Simply Wall St

MPC Container Ships ASA's (OB:MPCC): MPC Container Ships ASA owns and operates container ships. The company’s loss has recently broadened since it announced a -US$1.6m loss in the full financial year, compared to the latest trailing-twelve-month loss of -US$18.3m, moving it further away from breakeven. The most pressing concern for investors is MPCC’s path to profitability – when will it breakeven? Below I will provide a high-level summary of the industry analysts’ expectations for MPCC.

View our latest analysis for MPC Container Ships

Consensus from the 2 Shipping analysts is MPCC is on the verge of breakeven. They expect the company to post a final loss in 2019, before turning a profit of US$8.1m in 2020. So, MPCC is predicted to breakeven approximately a couple of months from now! In order to meet this breakeven date, I calculated the rate at which MPCC must grow year-on-year. It turns out an average annual growth rate of 113% is expected, which is extremely buoyant. If this rate turns out to be too aggressive, MPCC may become profitable much later than analysts predict.

OB:MPCC Past and Future Earnings, November 2nd 2019

Underlying developments driving MPCC’s growth isn’t the focus of this broad overview, but, 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. MPCC currently has a relatively high level of debt. Typically, debt shouldn’t exceed 40% of your equity, which in MPCC’s case is 58%. A higher level of debt requires more stringent capital management which increases the risk in investing in the loss-making company.

Next Steps:

There are key fundamentals of MPCC 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 MPCC, take a look at MPCC’s company page on Simply Wall St. I’ve also put together a list of essential aspects you should further examine:

  1. Valuation: What is MPCC 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 MPCC 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 MPC Container Ships’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.

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 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. Thank you for reading.