Breakeven On The Horizon For Climeon AB (publ) (STO:CLIME B)

We feel now is a pretty good time to analyse Climeon AB (publ)'s (STO:CLIME B) business as it appears the company may be on the cusp of a considerable accomplishment. Climeon AB (publ) provides heat power systems in Sweden, Europe, Asia, and North America. The company’s loss has recently broadened since it announced a kr111m loss in the full financial year, compared to the latest trailing-twelve-month loss of kr138m, moving it further away from breakeven. As path to profitability is the topic on Climeon'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 Climeon

Expectations from some of the Swedish Electrical analysts is that Climeon is on the verge of breakeven. They expect the company to post a final loss in 2021, before turning a profit of kr27m in 2022. Therefore, the company is expected to breakeven just over a year from today. 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 85% is expected, which is rather optimistic! If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.

Underlying developments driving Climeon's growth isn’t the focus of this broad overview, however, bear in mind that by and large 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. The company has managed its capital judiciously, with debt making up 19% 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 too many aspects of Climeon to cover in one brief article, but the key fundamentals for the company can all be found in one place – Climeon's company page on Simply Wall St. We've also put together a list of key aspects you should further research:

1. Valuation: What is Climeon 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 Climeon 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 Climeon’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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