Quantafuel ASA (OB:QFUEL) About To Shift From Loss To Profit

We feel now is a pretty good time to analyse Quantafuel ASA's (OB:QFUEL) business as it appears the company may be on the cusp of a considerable accomplishment. Quantafuel ASA, a technology-based energy company, which converts plastic waste to environment friendly fuels and chemicals in Norway. The kr4.2b market-cap company posted a loss in its most recent financial year of kr497m and a latest trailing-twelve-month loss of kr284m shrinking the gap between loss and breakeven. Many investors are wondering about the rate at which Quantafuel will turn a profit, with the big question being “when will the company breakeven?” Below we will provide a high-level summary of the industry analysts’ expectations for the company.

Check out our latest analysis for Quantafuel

Quantafuel is bordering on breakeven, according to the 3 Norwegian Commercial Services analysts. They expect the company to post a final loss in 2020, before turning a profit of kr50m in 2021. Therefore, the company is expected to breakeven roughly a year from now or less! At what rate will the company have to grow in order to realise the consensus estimates forecasting breakeven in under 12 months? Using a line of best fit, we calculated an average annual growth rate of 89%, which is rather optimistic! Should the business grow at a slower rate, it will become profitable at a later date than expected.

Underlying developments driving Quantafuel's growth isn’t the focus of this broad overview, but, keep in mind that typically 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 aspect worth mentioning. The company has managed its capital prudently, with debt making up 36% 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:

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

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. 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.
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