When Will Ferroamp Elektronik AB (publ) (STO:FERRO) Become Profitable?

Ferroamp Elektronik AB (publ) (STO:FERRO) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. Ferroamp Elektronik AB (publ) provides energy and power optimization solutions for homes, real estate, and industries in Sweden. The kr1.0b market-cap company announced a latest loss of kr33m on 31 December 2020 for its most recent financial year result. As path to profitability is the topic on Ferroamp Elektronik's investors mind, we've decided to gauge market sentiment. We've put together a brief outline of industry analyst expectations for the company, its year of breakeven and its implied growth rate.

View our latest analysis for Ferroamp Elektronik

Expectations from some of the Swedish Electrical analysts is that Ferroamp Elektronik is on the verge of breakeven. They anticipate the company to incur a final loss in 2021, before generating positive profits of kr11m in 2022. So, the company is predicted 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 63% 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.

Given this is a high-level overview, we won’t go into details of Ferroamp Elektronik's upcoming projects, though, bear in mind 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. The company has managed its capital judiciously, with debt making up 4.4% 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 Ferroamp Elektronik to cover in one brief article, but the key fundamentals for the company can all be found in one place – Ferroamp Elektronik's company page on Simply Wall St. We've also put together a list of important factors you should look at:

1. Valuation: What is Ferroamp Elektronik 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 Ferroamp Elektronik 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 Ferroamp Elektronik’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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