We Might See A Profit From Innergex Renewable Energy Inc. (TSE:INE) Soon

We feel now is a pretty good time to analyse Innergex Renewable Energy Inc.'s (TSE:INE) business as it appears the company may be on the cusp of a considerable accomplishment. Innergex Renewable Energy Inc. operates as an independent renewable power producer in Canada, the United States, France, and Chile. The CA$3.8b market-cap company announced a latest loss of CA$197m on 31 December 2021 for its most recent financial year result. The most pressing concern for investors is Innergex Renewable Energy's path to profitability – when will it 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 Innergex Renewable Energy

Innergex Renewable Energy is bordering on breakeven, according to the 6 Canadian Renewable Energy analysts. They expect the company to post a final loss in 2021, before turning a profit of CA$42m in 2022. Therefore, the company is expected to breakeven roughly 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 82% is expected, which is extremely buoyant. If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.

Given this is a high-level overview, we won’t go into details of Innergex Renewable Energy's 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.

Before we wrap up, there’s one issue worth mentioning. Innergex Renewable Energy currently has a debt-to-equity ratio of over 2x. Typically, 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 in investing in the loss-making company.

Next Steps:

This article is not intended to be a comprehensive analysis on Innergex Renewable Energy, so if you are interested in understanding the company at a deeper level, take a look at Innergex Renewable Energy's company page on Simply Wall St. We've also put together a list of key aspects you should look at:

1. Valuation: What is Innergex Renewable Energy 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 Innergex Renewable Energy 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 Innergex Renewable Energy’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. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.