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Stem, Inc. (NYSE:STEM) Is Expected To Breakeven In The Near Future

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·3 min read
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With the business potentially at an important milestone, we thought we'd take a closer look at Stem, Inc.'s (NYSE:STEM) future prospects. Stem, Inc. operates as an energy technology company in the United States. With the latest financial year loss of US$166m and a trailing-twelve-month loss of US$221m, the US$3.7b market-cap company amplified its loss by moving further away from its breakeven target. Many investors are wondering about the rate at which Stem will turn a profit, with the big question being “when will the company 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 Stem

Consensus from 4 of the American Electrical analysts is that Stem is on the verge of breakeven. They anticipate the company to incur a final loss in 2022, before generating positive profits of US$48m in 2023. Therefore, the company is expected to breakeven roughly 2 years from now. How fast will the company have to grow each year in order to reach the breakeven point by 2023? Working backwards from analyst estimates, it turns out that they expect the company to grow 69% 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

Given this is a high-level overview, we won’t go into details of Stem's upcoming projects, however, 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.

One thing we would like to bring into light with Stem is it currently has negative equity on its balance sheet. This can sometimes arise from accounting methods used to deal with accumulated losses from prior years, which are viewed as liabilities carried forward until it cancels out in the future. Oftentimes, losses exist only on paper but other times, it can be a red flag.

Next Steps:

There are too many aspects of Stem to cover in one brief article, but the key fundamentals for the company can all be found in one place – Stem's company page on Simply Wall St. We've also put together a list of key aspects you should look at:

  1. Valuation: What is Stem 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 Stem 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 Stem’s 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.

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. 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.