Analysts Are Optimistic We'll See A Profit From Kontrol Technologies Corp. (CSE:KNR)

With the business potentially at an important milestone, we thought we'd take a closer look at Kontrol Technologies Corp.'s (CSE:KNR) future prospects. Kontrol Technologies Corp. provides energy efficiency solutions and technologies to commercial energy consumers in Canada and the United States. With the latest financial year loss of CA$2.7m and a trailing-twelve-month loss of CA$2.0m, the CA$132m market-cap company alleviated its loss by moving closer towards its target of breakeven. The most pressing concern for investors is Kontrol Technologies' path to profitability – when will it breakeven? We've put together a brief outline of industry analyst expectations for the company, its year of breakeven and its implied growth rate.

Check out our latest analysis for Kontrol Technologies

According to some industry analysts covering Kontrol Technologies, breakeven is near. They anticipate the company to incur a final loss in 2020, before generating positive profits of CA$5.6m in 2021. The company is therefore projected to breakeven around 12 months from now or less. We calculated the rate at which the company must grow to meet the consensus forecasts predicting breakeven within 12 months. It turns out an average annual growth rate of 216% is expected, which is rather optimistic! Should the business grow at a slower rate, it will become profitable at a later date than expected.

Given this is a high-level overview, we won’t go into details of Kontrol Technologies' upcoming projects, but, take into account that generally 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 Kontrol Technologies is its debt-to-equity ratio of over 2x. Generally, the rule of thumb is debt shouldn’t exceed 40% of your equity, and the company has considerably exceeded this. A higher level of debt requires more stringent capital management which increases the risk in investing in the loss-making company.

Next Steps:

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

1. Valuation: What is Kontrol 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 Kontrol 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 Kontrol 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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