When Will ENNOSTAR Inc. (TPE:3714) Breakeven?

We feel now is a pretty good time to analyse ENNOSTAR Inc.'s (TPE:3714) business as it appears the company may be on the cusp of a considerable accomplishment. ENNOSTAR Inc. engages in the research and development, manufacture, and sale of compound semiconductors in Taiwan. On 31 December 2020, the NT$56b market-cap company posted a loss of NT$8.1b for its most recent financial year. The most pressing concern for investors is ENNOSTAR'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.

View our latest analysis for ENNOSTAR

ENNOSTAR is bordering on breakeven, according to the 2 Taiwanese Semiconductor analysts. They anticipate the company to incur a final loss in 2021, before generating positive profits of NT$363m in 2022. So, the company is predicted to breakeven just over a year from today. What rate will the company have to grow year-on-year in order to breakeven on this date? Using a line of best fit, we calculated an average annual growth rate of 164%, which is extremely buoyant. Should the business grow at a slower rate, it will become profitable at a later date than expected.

Given this is a high-level overview, we won’t go into details of ENNOSTAR's upcoming projects, though, take into account that by and large 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 14% 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 key fundamentals of ENNOSTAR which are not covered in this article, but we must stress again that this is merely a basic overview. For a more comprehensive look at ENNOSTAR, take a look at ENNOSTAR's company page on Simply Wall St. We've also put together a list of key factors you should look at:

1. Valuation: What is ENNOSTAR 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 ENNOSTAR 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 ENNOSTAR’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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