Robit Oyj (HEL:ROBIT): Is Breakeven Near?

With the business potentially at an important milestone, we thought we'd take a closer look at Robit Oyj's (HEL:ROBIT) future prospects. Robit Oyj manufactures and sells drilling consumables for applications in mining, construction and contracting, tunneling, and well drilling industries. With the latest financial year loss of €7.3m and a trailing-twelve-month loss of €6.0m, the €64m market-cap company alleviated its loss by moving closer towards its target of breakeven. The most pressing concern for investors is Robit Oyj'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 Robit Oyj

Expectations from some of the Finnish Machinery analysts is that Robit Oyj is on the verge of breakeven. They anticipate the company to incur a final loss in 2020, before generating positive profits of €1.4m in 2021. Therefore, the company is expected to breakeven just over a year from today. What rate will the company have to grow year-on-year in order to breakeven on this date? Using a line of best fit, we calculated an average annual growth rate of 157%, which signals high confidence from analysts. 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 Robit Oyj's upcoming projects, however, bear 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. Robit Oyj currently has a relatively high level of debt. Typically, debt shouldn’t exceed 40% of your equity, which in Robit Oyj's case is 67%. 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 Robit Oyj to cover in one brief article, but the key fundamentals for the company can all be found in one place – Robit Oyj's company page on Simply Wall St. We've also put together a list of key aspects you should further examine:

1. Valuation: What is Robit Oyj 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 Robit Oyj 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 Robit Oyj’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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