UQM Technologies Inc’s (NYSEMKT:UQM): UQM Technologies, Inc., together with its subsidiaries, develops, manufactures, and sells electric motors, generators, power electronic controllers, and fuel cell compressors in the United states and internationally. With the latest financial year loss of -US$4.8m and a trailing-twelve month of -US$6.8m, the US$65m market-cap amplifies its loss by moving further away from its breakeven target. The most pressing concern for investors is UQM’s path to profitability – when will it breakeven? In this article, I will touch on the expectations for UQM’s growth and when analysts expect the company to become profitable.
According to the industry analysts covering UQM, breakeven is near. They expect the company to post a final loss in 2020, before turning a profit of US$3.4m in 2021. Therefore, UQM is expected to breakeven roughly a couple of months from now! In order to meet this breakeven date, I calculated the rate at which UQM must grow year-on-year. It turns out an average annual growth rate of 62% is expected, which signals high confidence from analysts. If this rate turns out to be too aggressive, UQM may become profitable much later than analysts predict.
I’m not going to go through company-specific developments for UQM 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.
Before I wrap up, there’s one issue worth mentioning. UQM currently has a relatively high level of debt. Typically, debt shouldn’t exceed 40% of your equity, which in UQM’s case is 66%. A higher level of debt requires more stringent capital management which increases the risk in investing in the loss-making company.
This article is not intended to be a comprehensive analysis on UQM, so if you are interested in understanding the company at a deeper level, take a look at UQM’s company page on Simply Wall St. I’ve also put together a list of key factors you should look at:
- Valuation: What is UQM 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 UQM 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 UQM Technologies’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.