AAC Clyde Space AB (publ) (STO:AAC) Could Be Less Than A Year Away From Profitability

By
Simply Wall St
Published
January 25, 2022
OM:AAC
Source: Shutterstock

We feel now is a pretty good time to analyse AAC Clyde Space AB (publ)'s (STO:AAC) business as it appears the company may be on the cusp of a considerable accomplishment. AAC Clyde Space AB (publ) primarily provides solutions and services to the small satellite market in Sweden, the United Kingdom, other European countries, the United States, Asia, and internationally. With the latest financial year loss of kr38m and a trailing-twelve-month loss of kr45m, the kr481m market-cap company amplified its loss by moving further away from its breakeven target. As path to profitability is the topic on AAC Clyde Space's investors mind, we've decided to gauge market sentiment. In this article, we will touch on the expectations for the company's growth and when analysts expect it to become profitable.

Check out our latest analysis for AAC Clyde Space

AAC Clyde Space is bordering on breakeven, according to the 2 Swedish Aerospace & Defense analysts. They expect the company to post a final loss in 2021, before turning a profit of kr9.0m in 2022. The company is therefore projected to breakeven around 12 months from now or less. How fast will the company have to grow to reach the consensus forecasts that anticipate breakeven by 2022? Working backwards from analyst estimates, it turns out that they expect the company to grow 92% year-on-year, on average, which signals high confidence from analysts. Should the business grow at a slower rate, it will become profitable at a later date than expected.

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OM:AAC Earnings Per Share Growth January 25th 2022

We're not going to go through company-specific developments for AAC Clyde Space given that this is a high-level summary, though, take into account 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. AAC Clyde Space currently has no debt on its balance sheet, which is quite unusual for a cash-burning growth company, which usually has a high level of debt relative to its equity. This means that the company has been operating purely on its equity investment and has no debt burden. This aspect reduces the risk around investing in the loss-making company.

Next Steps:

There are key fundamentals of AAC Clyde Space 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 AAC Clyde Space, take a look at AAC Clyde Space's company page on Simply Wall St. We've also compiled a list of pertinent aspects you should look at:

  1. Historical Track Record: What has AAC Clyde Space'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 AAC Clyde Space'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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