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When Will Nanoco Group plc (LON:NANO) Turn A Profit?

Simply Wall St

Nanoco Group plc's (LON:NANO): Nanoco Group plc, together with its subsidiaries, engages in the research, development, manufacture, and licensing of cadmium and heavy-metal-free quantum dots (CFQD), and semiconductor nanomaterials for use in various commercial applications. The UK£114m market-cap posted a loss in its most recent financial year of -UK£6.0m and a latest trailing-twelve-month loss of -UK£4.3m shrinking the gap between loss and breakeven. Many investors are wondering the rate at which NANO will turn a profit, with the big question being “when will the company breakeven?” I’ve put together a brief outline of industry analyst expectations for NANO, its year of breakeven and its implied growth rate.

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View our latest analysis for Nanoco Group

According to the 4 industry analysts covering NANO, the consensus is breakeven is near. They anticipate the company to incur a final loss in 2020, before generating positive profits of UK£7.3m in 2021. Therefore, NANO is expected to breakeven roughly 2 years from today. What rate will NANO have to grow year-on-year in order to breakeven on this date? Using a line of best fit, I calculated an average annual growth rate of 89%, which is extremely buoyant. Should the business grow at a slower rate, it will become profitable at a later date than expected.

LSE:NANO Past and Future Earnings, May 27th 2019

I’m not going to go through company-specific developments for NANO given that this is a high-level summary, however, 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 aspect worth mentioning. NANO has managed its capital judiciously, with debt making up 4.1% of equity. This means that NANO 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 NANO to cover in one brief article, but the key fundamentals for the company can all be found in one place – NANO’s company page on Simply Wall St. I’ve also compiled a list of essential aspects you should further research:

  1. Historical Track Record: What has NANO's 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 Nanoco Group’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.