AAC Clyde Space AB (publ) (STO:AAC): Is Breakeven Near?

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) manufactures and sells miniaturized and advanced subsystems and components for cube and small satellites in Sweden, the United Kingdom, rest of Europe, the United States, Asia, and internationally. The kr267m market-cap company posted a loss in its most recent financial year of kr41m and a latest trailing-twelve-month loss of kr51m leading to an even wider gap between loss and breakeven. 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

Expectations from some of the Swedish Aerospace & Defense analysts is that AAC Clyde Space is on the verge of breakeven. They expect the company to post a final loss in 2024, before turning a profit of kr22m in 2025. Therefore, the company is expected to breakeven just over a year from now. 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 166%, which is extremely buoyant. If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.

Underlying developments driving AAC Clyde Space's growth isn’t the focus of this broad overview, but, bear in mind that generally a high forecast growth rate is not unusual for a company that is currently undergoing an investment period.

One thing we’d like to point out is that AAC Clyde Space has no debt on its balance sheet, which is rare for a loss-making growth company, which typically has high 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:

This article is not intended to be a comprehensive analysis on AAC Clyde Space, so if you are interested in understanding the company at a deeper level, take a look at AAC Clyde Space's company page on Simply Wall St. We've also put together a list of important aspects you should further examine:

1. Valuation: What is AAC Clyde Space 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 AAC Clyde Space 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 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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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.