Market Sentiment Around Loss-Making Eguana Technologies Inc. (CVE:EGT)

With the business potentially at an important milestone, we thought we'd take a closer look at Eguana Technologies Inc.'s (CVE:EGT) future prospects. Eguana Technologies Inc. designs and manufactures power electronics for residential and commercial fuel cell, photovoltaic, and battery applications in Asia, Australia, Canada, Europe, and the United States. With the latest financial year loss of CA$8.2m and a trailing-twelve-month loss of CA$8.8m, the CA$110m market-cap company amplified its loss by moving further away from its breakeven target. Many investors are wondering about the rate at which Eguana Technologies 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 Eguana Technologies

Expectations from some of the Canadian Electrical analysts is that Eguana Technologies is on the verge of breakeven. They expect the company to post a final loss in 2021, before turning a profit of CA$4.5m in 2022. Therefore, the company is expected to breakeven just over a year from now. What rate will the company have to grow year-on-year in order to breakeven on this date? Using a line of best fit, we calculated an average annual growth rate of 112%, which is rather optimistic! If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.

We're not going to go through company-specific developments for Eguana Technologies given that this is a high-level summary, though, bear in mind that typically a high forecast growth rate is not unusual for a company that is currently undergoing an investment period.

Before we wrap up, there’s one issue worth mentioning. Eguana Technologies currently has negative equity on its balance sheet. Accounting methods used to deal with losses accumulated over time can cause this to occur. This is because liabilities are carried forward into the future until it cancels. These losses tend to occur only on paper, however, in other cases it can be forewarning.

Next Steps:

There are key fundamentals of Eguana Technologies which are not covered in this article, but we must stress again that this is merely a basic overview. For a more comprehensive look at Eguana Technologies, take a look at Eguana Technologies' company page on Simply Wall St. We've also compiled a list of relevant factors you should look at:

1. Valuation: What is Eguana Technologies 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 Eguana Technologies 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 Eguana Technologies’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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