U.S. Markets closed

Superconductor Technologies Inc.'s (NASDAQ:SCON) Path To Profitability

Simply Wall St

Superconductor Technologies Inc.'s (NASDAQ:SCON): Superconductor Technologies Inc., together with its subsidiaries, develops, produces, and commercializes high temperature superconductor materials and related technologies in the United States. The US$3.9m market-cap posted a loss in its most recent financial year of -US$8.1m and a latest trailing-twelve-month loss of -US$9.4m leading to an even wider gap between loss and breakeven. The most pressing concern for investors is SCON’s path to profitability – when will it breakeven? Below I will provide a high-level summary of the industry analysts’ expectations for SCON.

View our latest analysis for Superconductor Technologies

According to the industry analysts covering SCON, breakeven is near. They anticipate the company to incur a final loss in 2020, before generating positive profits of US$648k in 2021. SCON is therefore projected to breakeven around 2 years from today. What rate will SCON 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 71%, which signals high confidence from analysts. Should the business grow at a slower rate, it will become profitable at a later date than expected.

NasdaqCM:SCON Past and Future Earnings, November 5th 2019

I’m not going to go through company-specific developments for SCON given that this is a high-level summary, however, take into account that typically a high forecast growth rate is not unusual for a company that is currently undergoing an investment period.

One thing I’d like to point out is that SCON has no debt on its balance sheet, which is rare for a loss-making loss-making, growth company, which usually has a high level of debt relative to its equity. SCON currently operates purely off its shareholder funding and has no debt obligation, reducing concerns around repayments and making it a less risky investment.

Next Steps:

This article is not intended to be a comprehensive analysis on SCON, so if you are interested in understanding the company at a deeper level, take a look at SCON’s company page on Simply Wall St. I’ve also put together a list of pertinent aspects you should further examine:

  1. Historical Track Record: What has SCON'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 Superconductor Technologies’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.