Scorpio Bulkers Inc.’s (NYSE:SALT): Scorpio Bulkers Inc., a shipping company, owns and operates dry bulk carriers. The US$296m market-cap company announced a latest loss of -US$12.7m on 31 December 2018 for its most recent financial year result. The most pressing concern for investors is SALT’s path to profitability – when will it breakeven? Below I will provide a high-level summary of the industry analysts’ expectations for SALT.
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SALT is bordering on breakeven, according to the 8 Shipping analysts. They expect the company to post a final loss in 2019, before turning a profit of US$69m in 2020. Therefore, SALT is expected to breakeven roughly a couple of months from now! In order to meet this breakeven date, I calculated the rate at which SALT must grow year-on-year. It turns out an average annual growth rate of 62% is expected, which signals high confidence from analysts. Should the business grow at a slower rate, it will become profitable at a later date than expected.
Underlying developments driving SALT’s growth isn’t the focus of this broad overview, but, keep in mind that generally a high growth rate is not out of the ordinary, particularly when a company is in a period of investment.
Before I wrap up, there’s one issue worth mentioning. SALT currently has a relatively high level of debt. Typically, debt shouldn’t exceed 40% of your equity, which in SALT’s case is 96%. Note that a higher debt obligation increases the risk around investing in the loss-making company.
This article is not intended to be a comprehensive analysis on SALT, so if you are interested in understanding the company at a deeper level, take a look at SALT’s company page on Simply Wall St. I’ve also compiled a list of relevant aspects you should look at:
- Valuation: What is SALT 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 SALT 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 Scorpio Bulkers’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 past 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. For errors that warrant correction please contact the editor at email@example.com.