Borgestad ASA (OB:BOR) About To Shift From Loss To Profit

We feel now is a pretty good time to analyse Borgestad ASA's (OB:BOR) business as it appears the company may be on the cusp of a considerable accomplishment. Borgestad ASA develops, manufactures, distributes, and installs refractory products in Norway. On 31 December 2023, the kr503m market-cap company posted a loss of kr36m for its most recent financial year. Many investors are wondering about the rate at which Borgestad will turn a profit, with the big question being “when will the company breakeven?” In this article, we will touch on the expectations for the company's growth and when analysts expect it to become profitable.

View our latest analysis for Borgestad

Borgestad is bordering on breakeven, according to some Norwegian Basic Materials analysts. They anticipate the company to incur a final loss in 2023, before generating positive profits of kr121m in 2024. The company is therefore projected to breakeven around 12 months from now or less. We calculated the rate at which the company must grow to meet the consensus forecasts predicting breakeven within 12 months. It turns out an average annual growth rate of 27% is expected, which is extremely buoyant. If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.

We're not going to go through company-specific developments for Borgestad given that this is a high-level summary, but, bear in mind that generally 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 issue worth mentioning. Borgestad currently has a relatively high level of debt. Typically, debt shouldn’t exceed 40% of your equity, which in Borgestad's case is 46%. Note that a higher debt obligation increases the risk around investing in the loss-making company.

Next Steps:

There are too many aspects of Borgestad to cover in one brief article, but the key fundamentals for the company can all be found in one place – Borgestad's company page on Simply Wall St. We've also compiled a list of relevant aspects you should further examine:

1. Valuation: What is Borgestad 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 Borgestad 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 Borgestad’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.