Analysts Expect Breakeven For Quantafuel ASA (OB:QFUEL) Before Long

With the business potentially at an important milestone, we thought we'd take a closer look at Quantafuel ASA's (OB:QFUEL) future prospects. Quantafuel ASA, a technology-based energy company, which converts plastic waste to environment friendly fuels and chemicals in Norway. The kr4.6b market-cap company announced a latest loss of kr497m on 31 December 2020 for its most recent financial year result. The most pressing concern for investors is Quantafuel'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 Quantafuel

Consensus from 4 of the Norwegian Commercial Services analysts is that Quantafuel is on the verge of breakeven. They anticipate the company to incur a final loss in 2021, before generating positive profits of kr31m in 2022. The company is therefore projected to breakeven just over a year from now. 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 99%, which signals high confidence from analysts. Should the business grow at a slower rate, it will become profitable at a later date than expected.

We're not going to go through company-specific developments for Quantafuel given that this is a high-level summary, however, keep in mind that generally 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. Quantafuel currently has a relatively high level of debt. Generally, the rule of thumb is debt shouldn’t exceed 40% of your equity, which in Quantafuel's case is 80%. 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 Quantafuel to cover in one brief article, but the key fundamentals for the company can all be found in one place – Quantafuel's company page on Simply Wall St. We've also compiled a list of key factors you should further research:

1. Historical Track Record: What has Quantafuel'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 Quantafuel'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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