When Can We Expect A Profit From Carbon Revolution Limited (ASX:CBR)?

Carbon Revolution Limited (ASX:CBR) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. Carbon Revolution Limited designs, manufactures, and markets single piece carbon fiber wheels to original equipment manufacturers worldwide. On 30 June 2020, the AU$395m market-cap company posted a loss of AU$114m for its most recent financial year. 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?” Below we will provide a high-level summary of the industry analysts’ expectations for the company.

See our latest analysis for Carbon Revolution

Carbon Revolution is bordering on breakeven, according to the 2 Australian Auto Components analysts. They anticipate the company to incur a final loss in 2022, before generating positive profits of AU$7.8m in 2023. The company is therefore projected to breakeven around 2 years from today. 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 82% is expected, 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, though, bear in mind that typically 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 21% 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 put together a list of relevant aspects you should further examine:

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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