ITM Power Plc (LON:ITM): When Will It Breakeven?

ITM Power Plc's (LON:ITM): ITM Power Plc designs, manufactures, and sells hydrogen energy systems for energy storage, clean fuel production, and renewable chemistry in the United Kingdom, Germany, Italy, rest of Europe, and North America. The UK£120m market-cap posted a loss in its most recent financial year of -UK£6.1m and a latest trailing-twelve-month loss of -UK£8.8m leading to an even wider gap between loss and breakeven. Many investors are wondering the rate at which ITM will turn a profit, with the big question being “when will the company breakeven?” In this article, I will touch on the expectations for ITM’s growth and when analysts expect the company to become profitable.

View our latest analysis for ITM Power

According to the industry analysts covering ITM, breakeven is near. They anticipate the company to incur a final loss in 2021, before generating positive profits of UK£2.8m in 2022. ITM is therefore projected to breakeven around 3 years from now. In order to meet this breakeven date, I calculated the rate at which ITM must grow year-on-year. It turns out an average annual growth rate of 64% is expected, which is rather optimistic! Should the business grow at a slower rate, it will become profitable at a later date than expected.

Underlying developments driving ITM’s growth isn’t the focus of this broad overview, though, keep in mind that typically a high growth rate is not out of the ordinary, particularly when a company is in a period of investment.

One thing I’d like to point out is that ITM has no debt on its balance sheet, which is rare for a loss-making loss-making, growth company, which typically has high debt relative to its equity. ITM 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:

There are key fundamentals of ITM 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 ITM, take a look at ITM’s company page on Simply Wall St. I’ve also put together a list of essential aspects you should further research:

1. Historical Track Record: What has ITM'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 ITM Power’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.