Breakeven Is Near for Pacifico Renewables Yield AG (ETR:PRY)

We feel now is a pretty good time to analyse Pacifico Renewables Yield AG's (ETR:PRY) business as it appears the company may be on the cusp of a considerable accomplishment. Pacifico Renewables Yield AG develops, constructs, and operates renewable energy power plants in Germany, the Czech Republic, Italy, and the Netherlands. The €121m market-cap company posted a loss in its most recent financial year of €1.7m and a latest trailing-twelve-month loss of €1.3m shrinking the gap between loss and breakeven. The most pressing concern for investors is Pacifico Renewables Yield's 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.

View our latest analysis for Pacifico Renewables Yield

Pacifico Renewables Yield is bordering on breakeven, according to the 2 German Renewable Energy analysts. They anticipate the company to incur a final loss in 2020, before generating positive profits of €4.4m 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 35%, 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 Pacifico Renewables Yield's upcoming projects, but, bear in mind that by and large 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. Pacifico Renewables Yield currently has a debt-to-equity ratio of 157%. 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 in investing in the loss-making company.

Next Steps:

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

1. Historical Track Record: What has Pacifico Renewables Yield's 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 Pacifico Renewables Yield'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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