Transphorm, Inc. (NASDAQ:TGAN) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. Transphorm, Inc., a semiconductor company, develops, manufactures, and sells gallium nitride (GaN) semiconductor components for use in power conversion in Mainland China, Hong Kong, Taiwan, the United States, Japan, South Korea, and Europe. On 31 March 2022, the US$264m market-cap company posted a loss of US$10m for its most recent financial year. Many investors are wondering about the rate at which Transphorm will turn a profit, with the big question being “when will the company breakeven?” In this article, we will touch on the expectations for the company's growth and when analysts expect it to become profitable.
According to the 4 industry analysts covering Transphorm, the consensus is that breakeven is near. They anticipate the company to incur a final loss in 2023, before generating positive profits of US$10m in 2024. So, the company is predicted to breakeven approximately 2 years from now. In order to meet this breakeven date, we calculated the rate at which the company must grow year-on-year. It turns out an average annual growth rate of 83% is expected, which is rather optimistic! Should the business grow at a slower rate, it will become profitable at a later date than expected.
Given this is a high-level overview, we won’t go into details of Transphorm's upcoming projects, though, bear in mind that by and large a high growth rate is not out of the ordinary, particularly when a company is in a period of investment.
Before we wrap up, there’s one aspect worth mentioning. The company has managed its capital prudently, with debt making up 39% of equity. This means that it has predominantly funded its operations from equity capital, and its low debt obligation reduces the risk around investing in the loss-making company.
There are too many aspects of Transphorm to cover in one brief article, but the key fundamentals for the company can all be found in one place – Transphorm's company page on Simply Wall St. We've also put together a list of important aspects you should further research:
Historical Track Record: What has Transphorm'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.
Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Transphorm's board and the CEO’s background.
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.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.
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