When Can We Expect A Profit From Surface Transforms Plc (LON:SCE)?

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 UK£28m market-cap company posted a loss in its most recent financial year of UK£4.8m and a latest trailing-twelve-month loss of UK£7.4m leading to an even wider gap between loss and breakeven. The most pressing concern for investors is Surface Transforms' path to profitability – when will it breakeven? Below we will provide a high-level summary of the industry analysts’ expectations for the company.

View our latest analysis for Surface Transforms

Surface Transforms is bordering on breakeven, according to the 2 British Auto Components analysts. They anticipate the company to incur a final loss in 2024, before generating positive profits of UK£6.5m in 2025. So, the company is predicted to breakeven approximately 2 years 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 98%, which is rather optimistic! If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.

We're not going to go through company-specific developments for Surface Transforms given that this is a high-level summary, though, bear in mind that generally 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 3.4% 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 too many aspects of Surface Transforms to cover in one brief article, but the key fundamentals for the company can all be found in one place – Surface Transforms' company page on Simply Wall St. We've also compiled a list of pertinent aspects you should further research:

1. Historical Track Record: What has Surface Transforms' 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 Surface Transforms' 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.