When Will Carbon Revolution Limited (ASX:CBR) Turn A Profit?

We feel now is a pretty good time to analyse Carbon Revolution Limited's (ASX:CBR) business as it appears the company may be on the cusp of a considerable accomplishment. Carbon Revolution Limited designs, manufactures, and markets single piece carbon fiber wheels to original equipment manufacturers worldwide. The AU$233m market-cap company posted a loss in its most recent financial year of AU$27.2m and a latest trailing-twelve-month loss of AU$115.7m leading to an even wider gap between loss and breakeven. Many investors are wondering about the rate at which Carbon Revolution will turn a profit, with the big question being “when will the company breakeven?” We've put together a brief outline of industry analyst expectations for the company, its year of breakeven and its implied growth rate.

See our latest analysis for Carbon Revolution

Consensus from 2 of the Australian Auto Components analysts is that Carbon Revolution is on the verge of breakeven. They anticipate the company to incur a final loss in 2021, before generating positive profits of AU$850k in 2022. Therefore, the company is expected to breakeven roughly 2 years from today. How fast will the company have to grow each year in order to reach the breakeven point by 2022? Working backwards from analyst estimates, it turns out that they expect the company to grow 72% year-on-year, on average, which is extremely buoyant. Should the business grow at a slower rate, it will become profitable at a later date than expected.

Underlying developments driving Carbon Revolution's growth isn’t the focus of this broad overview, however, keep 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 we wrap up, there’s one aspect worth mentioning. The company has managed its capital prudently, with debt making up 24% 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.

Next Steps:

There are too many aspects of Carbon Revolution to cover in one brief article, but the key fundamentals for the company can all be found in one place – Carbon Revolution's company page on Simply Wall St. We've also compiled a list of essential factors you should further research:

1. Valuation: What is Carbon Revolution 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 Carbon Revolution is currently mispriced by the market.
2. Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Carbon Revolution’s board and the CEO’s background.
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.

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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. 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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