Stock Analysis

Electrovaya Inc.'s (TSE:EFL) Profit Outlook

TSX:ELVA
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We feel now is a pretty good time to analyse Electrovaya Inc.'s (TSE:EFL) business as it appears the company may be on the cusp of a considerable accomplishment. Electrovaya Inc., together with its subsidiaries, designs, develops, manufactures, and markets lithium-ion based battery products in Canada, the United States, and internationally. The CA$149m market-cap company’s loss lessened since it announced a US$2.8m loss in the full financial year, compared to the latest trailing-twelve-month loss of US$675k, as it approaches breakeven. Many investors are wondering about the rate at which Electrovaya will turn a profit, with the big question being “when will the company breakeven?” In this article, we will touch on the expectations for the company's growth and when analysts expect it to become profitable.

See our latest analysis for Electrovaya

Expectations from some of the Canadian Electrical analysts is that Electrovaya is on the verge of breakeven. They anticipate the company to incur a final loss in 2020, before generating positive profits of US$4.8m in 2021. The company is therefore projected to breakeven just over a year from now. 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 158% is expected, which is rather optimistic! Should the business grow at a slower rate, it will become profitable at a later date than expected.

earnings-per-share-growth
TSX:EFL Earnings Per Share Growth November 20th 2020

Underlying developments driving Electrovaya's growth isn’t the focus of this broad overview, though, bear in mind that by and large a high growth rate is not out of the ordinary, particularly when a company is in a period of investment.

One thing we would like to bring into light with Electrovaya is it currently has negative equity on its balance sheet. This can sometimes arise from accounting methods used to deal with accumulated losses from prior years, which are viewed as liabilities carried forward until it cancels out in the future. These losses tend to occur only on paper, however, in other cases it can be forewarning.

Next Steps:

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

  1. Historical Track Record: What has Electrovaya'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 Electrovaya'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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