Breakeven Is Near for Midsummer AB (publ) (STO:MIDS)

We feel now is a pretty good time to analyse Midsummer AB (publ)'s (STO:MIDS) business as it appears the company may be on the cusp of a considerable accomplishment. Midsummer AB (publ) develops and supplies equipment for the production of flexible thin-film solar cells in Sweden, China, Hong Kong, the European Union, and internationally. On 31 December 2024, the kr273m market-cap company posted a loss of kr129m for its most recent financial year. Many investors are wondering about the rate at which Midsummer will turn a profit, with the big question being “when will the company breakeven?” In this article, we will touch on the expectations for the company's growth and when analysts expect it to become profitable.

Consensus from 2 of the Swedish Semiconductor analysts is that Midsummer is on the verge of breakeven. They expect the company to post a final loss in 2024, before turning a profit of kr13m in 2025. Therefore, the company is expected to breakeven roughly 12 months from now or less. How fast will the company have to grow to reach the consensus forecasts that anticipate breakeven by 2025? Working backwards from analyst estimates, it turns out that they expect the company to grow 117% year-on-year, on average, which is extremely buoyant. Should the business grow at a slower rate, it will become profitable at a later date than expected.

We're not going to go through company-specific developments for Midsummer given that this is a high-level summary, but, take into account that generally a high forecast growth rate is not unusual for a company that is currently undergoing an investment period.

View our latest analysis for Midsummer

Before we wrap up, there’s one issue worth mentioning. Midsummer currently has a debt-to-equity ratio of over 2x. Typically, debt shouldn’t exceed 40% of your equity, and the company has considerably exceeded this. A higher level of debt requires more stringent capital management which increases the risk in investing in the loss-making company.

Next Steps:

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

1. Valuation: What is Midsummer 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 Midsummer 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 Midsummer’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.