Analysts Are Optimistic We'll See A Profit From Nexam Chemical Holding AB (publ) (STO:NEXAM)

With the business potentially at an important milestone, we thought we'd take a closer look at Nexam Chemical Holding AB (publ)'s (STO:NEXAM) future prospects. Nexam Chemical Holding AB (publ) develops solutions that enhance properties and performance of various types of polymers in Sweden. On 31 December 2020, the kr1.2b market-cap company posted a loss of kr8.1m for its most recent financial year. Many investors are wondering about the rate at which Nexam Chemical Holding will turn a profit, with the big question being “when will the company breakeven?” Below we will provide a high-level summary of the industry analysts’ expectations for the company.

See our latest analysis for Nexam Chemical Holding

Nexam Chemical Holding is bordering on breakeven, according to some Swedish Chemicals analysts. They anticipate the company to incur a final loss in 2020, before generating positive profits of kr3.3m in 2021. Therefore, the company is expected to breakeven roughly 12 months from now or less. At what rate will the company have to grow in order to realise the consensus estimates forecasting breakeven in under 12 months? Using a line of best fit, we calculated an average annual growth rate of 132%, which signals high confidence from analysts. 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 Nexam Chemical Holding's upcoming projects, but, bear in mind that generally a high growth rate is not out of the ordinary, particularly when a company is in a period of investment.

One thing we’d like to point out is that 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:

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

1. Historical Track Record: What has Nexam Chemical Holding'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 Nexam Chemical Holding'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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