Capstone Turbine Corporation’s (NASDAQ:CPST): Capstone Turbine Corporation develops, manufactures, markets, and services microturbine technology solutions for use in stationary distributed power generation applications worldwide. The company’s loss has recently broadened since it announced a -US$16.7m loss in the full financial year, compared to the latest trailing-twelve-month loss of -US$17.5m, moving it further away from breakeven. Many investors are wondering the rate at which CPST will turn a profit, with the big question being “when will the company breakeven?” Below I will provide a high-level summary of the industry analysts’ expectations for CPST.
CPST is bordering on breakeven, according to the 5 Electrical analysts. They expect the company to post a final loss in 2021, before turning a profit of US$400k in 2022. Therefore, CPST is expected to breakeven roughly 3 years from now. What rate will CPST 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 74%, 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 CPST’s growth isn’t the focus of this broad overview, though, bear 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. CPST currently has a debt-to-equity ratio of 144%. Generally, the rule of thumb is debt shouldn’t exceed 40% of your equity, which in CPST’s case, it has significantly overshot. A higher level of debt requires more stringent capital management which increases the risk around investing in the loss-making company.
There are key fundamentals of CPST which are not covered in this article, but I must stress again that this is merely a basic overview. For a more comprehensive look at CPST, take a look at CPST’s company page on Simply Wall St. I’ve also compiled a list of important factors you should look at:
- Valuation: What is CPST 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 CPST 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 Capstone Turbine’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.
If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. 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.
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. Thank you for reading.
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