Stock Analysis

Analysts Expect Surface Transforms Plc (LON:SCE) To Breakeven Soon

  •  Updated
AIM:SCE
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We feel now is a pretty good time to analyse Surface Transforms Plc's (LON:SCE) business as it appears the company may be on the cusp of a considerable accomplishment. Surface Transforms Plc, together with its subsidiaries, researches, designs, develops, manufactures, and sells carbon ceramic products for the brakes market in the United Kingdom, Germany, Sweden, rest of Europe, the United States, and internationally. The company’s loss has recently broadened since it announced a UK£4.0m loss in the full financial year, compared to the latest trailing-twelve-month loss of UK£4.2m, moving it further away from breakeven. Many investors are wondering about the rate at which Surface Transforms will turn a profit, with the big question being “when will the company 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 Surface Transforms

Surface Transforms is bordering on breakeven, according to the 3 British Auto Components analysts. They anticipate the company to incur a final loss in 2021, before generating positive profits of UK£469k in 2022. So, the company is predicted to breakeven approximately 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 71% is expected, which is rather optimistic! Should the business grow at a slower rate, it will become profitable at a later date than expected.

earnings-per-share-growth
AIM:SCE Earnings Per Share Growth October 3rd 2022

Given this is a high-level overview, we won’t go into details of Surface Transforms' upcoming projects, though, take into account that typically a high growth rate is not out of the ordinary, particularly when a company is in a period of investment.

One thing we’d like to point out is that The company has managed its capital judiciously, with debt making up 6.7% of equity. This means that it has predominantly funded its operations from equity capital, and its low debt obligation reduces the risk around investing in the loss-making company.

Next Steps:

There are key fundamentals of Surface Transforms 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 Surface Transforms, take a look at Surface Transforms' company page on Simply Wall St. We've also compiled a list of important factors you should further examine:

  1. Valuation: What is Surface Transforms 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 Surface Transforms 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 Surface Transforms’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.

Valuation is complex, but we're helping make it simple.

Find out whether Surface Transforms is potentially over or undervalued by checking out our comprehensive analysis, which includes fair value estimates, risks and warnings, dividends, insider transactions and financial health.

View the Free Analysis

About AIM:SCE

Surface Transforms

Surface Transforms Plc, together with its subsidiaries, researches, designs, develops, manufactures, and sells carbon ceramic products for the brakes market in the United Kingdom, Germany, Sweden, rest of Europe, the United States, and internationally.

The Snowflake is a visual investment summary with the score of each axis being calculated by 6 checks in 5 areas.

Analysis AreaScore (0-6)
Valuation1
Future Growth5
Past Performance0
Financial Health3
Dividends0

Read more about these checks in the individual report sections or in our analysis model.

High growth potential with mediocre balance sheet.