REC Silicon ASA (OB:RECSI) Is Expected To Breakeven In The Near Future
With the business potentially at an important milestone, we thought we'd take a closer look at REC Silicon ASA's (OB:RECSI) future prospects. REC Silicon ASA, together with its subsidiaries, produces and sells silicon materials for the solar and electronics industries worldwide. The kr7.4b market-cap company posted a loss in its most recent financial year of US$44m and a latest trailing-twelve-month loss of US$74m leading to an even wider gap between loss and breakeven. The most pressing concern for investors is REC Silicon's path to profitability – when will it 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 REC Silicon
According to some industry analysts covering REC Silicon, breakeven is near. They expect the company to post a final loss in 2023, before turning a profit of US$52m in 2024. Therefore, the company is expected to breakeven just over a year from now. In order to meet this breakeven date, we calculated the rate at which the company must grow year-on-year. It turns out an average annual growth rate of 83% is expected, which signals high confidence from analysts. Should the business grow at a slower rate, it will become profitable at a later date than expected.
Underlying developments driving REC Silicon's growth isn’t the focus of this broad overview, but, bear in mind that typically 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 REC Silicon is its debt-to-equity ratio of 131%. Generally, the rule of thumb is debt shouldn’t exceed 40% of your equity, and the company has considerably exceeded this. Note that a higher debt obligation increases the risk around investing in the loss-making company.
This article is not intended to be a comprehensive analysis on REC Silicon, so if you are interested in understanding the company at a deeper level, take a look at REC Silicon's company page on Simply Wall St. We've also put together a list of important factors you should further examine:
- Valuation: What is REC Silicon 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 REC Silicon is currently mispriced by the market.
- Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on REC Silicon’s board and the CEO’s background.
- 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.
Valuation is complex, but we're helping make it simple.
Find out whether REC Silicon is potentially over or undervalued by checking out our comprehensive analysis, which includes fair value estimates, risks and warnings, dividends, insider transactions and financial health.View the Free Analysis
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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.
REC Silicon ASA, together with its subsidiaries, produces and sells silicon materials for the solar and electronics industries worldwide.
Exceptional growth potential with adequate balance sheet.