va-Q-tec AG (ETR:VQT) Could Be Less Than A Year Away From Profitability

We feel now is a pretty good time to analyse va-Q-tec AG's (ETR:VQT) business as it appears the company may be on the cusp of a considerable accomplishment. va-Q-tec AG develops, produces, and markets vacuum insulation panels and phase change materials in Germany, rest of European Union, and internationally. With the latest financial year loss of €2.6m and a trailing-twelve-month loss of €1.6m, the €398m market-cap company alleviated its loss by moving closer towards its target of breakeven. Many investors are wondering about the rate at which va-Q-tec 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.

Check out our latest analysis for va-Q-tec

va-Q-tec is bordering on breakeven, according to the 5 German Machinery analysts. They anticipate the company to incur a final loss in 2020, before generating positive profits of €4.9m in 2021. The company is therefore projected to breakeven around 12 months from now or less. At what rate will the company have to grow in order to realise the consensus estimates forecasting breakeven in under 12 months? Using a line of best fit, we calculated an average annual growth rate of 122%, which is extremely buoyant. Should the business grow at a slower rate, it will become profitable at a later date than expected.

We're not going to go through company-specific developments for va-Q-tec given that this is a high-level summary, though, keep 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.

Before we wrap up, there’s one issue worth mentioning. va-Q-tec currently has a relatively high level of debt. Typically, debt shouldn’t exceed 40% of your equity, which in va-Q-tec's case is 90%. Note that a higher debt obligation increases the risk in investing in the loss-making company.

Next Steps:

There are key fundamentals of va-Q-tec 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 va-Q-tec, take a look at va-Q-tec's company page on Simply Wall St. We've also put together a list of relevant factors you should look at:

1. Valuation: What is va-Q-tec 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 va-Q-tec 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 va-Q-tec’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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