Loss-Making Ocean Sun AS (OB:OSUN) Expected To Breakeven In The Medium-Term

We feel now is a pretty good time to analyse Ocean Sun AS' (OB:OSUN) business as it appears the company may be on the cusp of a considerable accomplishment. Ocean Sun AS develops floating power system with solar panels. The kr365m market-cap company posted a loss in its most recent financial year of kr19m and a latest trailing-twelve-month loss of kr20m leading to an even wider gap between loss and breakeven. The most pressing concern for investors is Ocean Sun'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.

See our latest analysis for Ocean Sun

Ocean Sun is bordering on breakeven, according to some Norwegian Professional Services analysts. They anticipate the company to incur a final loss in 2023, before generating positive profits of kr4.0m in 2024. So, the company is predicted to breakeven approximately 2 years from today. How fast will the company have to grow each year in order to reach the breakeven point by 2024? Working backwards from analyst estimates, it turns out that they expect the company to grow 104% year-on-year, on average, which signals high confidence from analysts. 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 Ocean Sun'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.

One thing we’d like to point out is that Ocean Sun has no debt on its balance sheet, which is quite unusual for a cash-burning growth company, which usually has a high level of debt relative to its equity. This means that the company has been operating purely on its equity investment and has no debt burden. This aspect reduces the risk around investing in the loss-making company.

Next Steps:

This article is not intended to be a comprehensive analysis on Ocean Sun, so if you are interested in understanding the company at a deeper level, take a look at Ocean Sun's company page on Simply Wall St. We've also compiled a list of key factors you should look at:

1. Valuation: What is Ocean Sun 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 Ocean Sun 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 Ocean Sun’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. 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.