When Can We Expect A Profit From Quantafuel ASA (OB:QFUEL)?

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 AS, a technology-based energy company, which converts plastic waste to environment friendly fuels and chemicals in Norway. The company’s loss has recently broadened since it announced a kr152m loss in the full financial year, compared to the latest trailing-twelve-month loss of kr539m, moving it further away from breakeven. The most pressing concern for investors is Quantafuel's 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 Quantafuel

According to the 4 industry analysts covering Quantafuel, the consensus is that breakeven is near. They anticipate the company to incur a final loss in 2021, before generating positive profits of kr67m in 2022. Therefore, the company is expected to breakeven just over a year from today. How fast will the company have to grow each year in order to reach the breakeven point by 2022? Working backwards from analyst estimates, it turns out that they expect the company to grow 87% year-on-year, on average, which is rather optimistic! 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 by and large a high forecast growth rate is not unusual for a company that is currently undergoing an investment period.

One thing we would like to bring into light with Quantafuel is its 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 81%. A higher level of debt requires more stringent capital management which increases the risk in 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 put together a list of relevant factors you should further research:

1. Valuation: What is Quantafuel 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 Quantafuel 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 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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