Stock Analysis

OrganoClick AB (publ)'s (STO:ORGC) Shift From Loss To Profit

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We feel now is a pretty good time to analyse OrganoClick AB (publ)'s (STO:ORGC) business as it appears the company may be on the cusp of a considerable accomplishment. OrganoClick AB (publ), a material and chemical technology company, develops, produces, and markets fiber-based materials and chemicals for treatment of wood, technical textile and nonwoven, and bio composites in Sweden. On 31 December 2022, the kr379m market-cap company posted a loss of kr44m for its most recent financial year. The most pressing concern for investors is OrganoClick's path to profitability – when will it breakeven? In this article, we will touch on the expectations for the company's growth and when analysts expect it to become profitable.

See our latest analysis for OrganoClick

OrganoClick is bordering on breakeven, according to some Swedish Chemicals analysts. They anticipate the company to incur a final loss in 2024, before generating positive profits of kr4.6m in 2025. Therefore, the company is expected to breakeven roughly 2 years from now. How fast will the company have to grow each year in order to reach the breakeven point by 2025? Working backwards from analyst estimates, it turns out that they expect the company to grow 93% year-on-year, on average, which is extremely buoyant. If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.

OM:ORGC Earnings Per Share Growth March 31st 2023

Given this is a high-level overview, we won’t go into details of OrganoClick's upcoming projects, but, keep in mind that typically a high forecast growth rate is not unusual for a company that is currently undergoing an investment period.

Before we wrap up, there’s one issue worth mentioning. OrganoClick currently has a relatively high level of debt. Generally, the rule of thumb is debt shouldn’t exceed 40% of your equity, which in OrganoClick's case is 66%. A higher level of debt requires more stringent capital management which increases the risk around investing in the loss-making company.

Next Steps:

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

  1. Valuation: What is OrganoClick 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 OrganoClick 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 OrganoClick’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.

Valuation is complex, but we're helping make it simple.

Find out whether OrganoClick is potentially over or undervalued by checking out our comprehensive analysis, which includes fair value estimates, risks and warnings, dividends, insider transactions and financial health.

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