Stock Analysis

Market Sentiment Around Loss-Making FLYHT Aerospace Solutions Ltd. (CVE:FLY)

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We feel now is a pretty good time to analyse FLYHT Aerospace Solutions Ltd.'s (CVE:FLY) business as it appears the company may be on the cusp of a considerable accomplishment. FLYHT Aerospace Solutions Ltd. provides real-time communications with aircrafts for the aerospace industry. The CA$18m market-cap company posted a loss in its most recent financial year of CA$747k and a latest trailing-twelve-month loss of CA$2.5m leading to an even wider gap between loss and breakeven. Many investors are wondering about the rate at which FLYHT Aerospace Solutions 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 FLYHT Aerospace Solutions

According to some industry analysts covering FLYHT Aerospace Solutions, breakeven is near. They expect the company to post a final loss in 2021, before turning a profit of CA$3.5m in 2022. The company is therefore projected to breakeven just over a year 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 82% 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.

TSXV:FLY Earnings Per Share Growth January 4th 2021

Given this is a high-level overview, we won’t go into details of FLYHT Aerospace Solutions' upcoming projects, but, keep in mind that by and large a high forecast growth rate is not unusual for a company that is currently undergoing an investment period.

One thing we would like to bring into light with FLYHT Aerospace Solutions is its debt-to-equity ratio of 118%. Generally, the rule of thumb is debt shouldn’t exceed 40% of your equity, which in this case, the company has significantly overshot. A higher level of debt requires more stringent capital management which increases the risk around investing in the loss-making company.

Next Steps:

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

  1. Historical Track Record: What has FLYHT Aerospace Solutions' 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 FLYHT Aerospace Solutions' 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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