When Will Midsummer AB (publ) (STO:MIDS) Turn A Profit?

Midsummer AB (publ) (STO:MIDS) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. 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. The company’s loss has recently broadened since it announced a kr88m loss in the full financial year, compared to the latest trailing-twelve-month loss of kr179m, moving it further away from breakeven. The most pressing concern for investors is Midsummer'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.

Check out our latest analysis for Midsummer

Expectations from some of the Swedish Semiconductor analysts is that Midsummer is on the verge of breakeven. They anticipate the company to incur a final loss in 2023, before generating positive profits of kr57m in 2024. 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 74% 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.

We're not going to go through company-specific developments for Midsummer given that this is a high-level summary, 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.

Before we wrap up, there’s one issue worth mentioning. Midsummer currently has a relatively high level of debt. Typically, debt shouldn’t exceed 40% of your equity, which in Midsummer's case is 80%. A higher level of debt requires more stringent capital management which increases the risk around investing in the loss-making company.

Next Steps:

There are too many aspects of Midsummer to cover in one brief article, but the key fundamentals for the company can all be found in one place – Midsummer's company page on Simply Wall St. We've also put together a list of relevant factors you should look at:

1. Historical Track Record: What has Midsummer'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 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.