Breakeven On The Horizon For Atlantic Sapphire ASA (OB:ASA)

We feel now is a pretty good time to analyse Atlantic Sapphire ASA's (OB:ASA) business as it appears the company may be on the cusp of a considerable accomplishment. Atlantic Sapphire ASA, together with its subsidiaries, engages in the land-based salmon farming business. The kr6.7b market-cap company announced a latest loss of US$55m on 31 December 2020 for its most recent financial year result. Many investors are wondering about the rate at which Atlantic Sapphire 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.

View our latest analysis for Atlantic Sapphire

Consensus from 5 of the Norwegian Food analysts is that Atlantic Sapphire is on the verge of breakeven. They expect the company to post a final loss in 2021, before turning a profit of US$31m in 2022. So, the company is predicted to breakeven just over a year 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 66%, 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.

Underlying developments driving Atlantic Sapphire's growth isn’t the focus of this broad overview, though, take into account 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 The company has managed its capital judiciously, with debt making up 20% 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 key fundamentals of Atlantic Sapphire which are not covered in this article, but we must stress again that this is merely a basic overview. For a more comprehensive look at Atlantic Sapphire, take a look at Atlantic Sapphire'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 Atlantic Sapphire'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 Atlantic Sapphire'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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