With the business potentially at an important milestone, we thought we’d take a closer look at Workhorse Group Inc.’s (NASDAQ:WKHS) future prospects. Workhorse Group Inc. designs, manufactures, builds, sells, and leases battery-electric vehicles and aircraft in the United States. The US$2.4b market-cap company posted a loss in its most recent financial year of US$37m and a latest trailing-twelve-month loss of US$137m leading to an even wider gap between loss and breakeven. The most pressing concern for investors is Workhorse Group’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.
According to the 5 industry analysts covering Workhorse Group, the consensus is that breakeven is near. They anticipate the company to incur a final loss in 2021, before generating positive profits of US$4.5m in 2022. So, the company is predicted to breakeven approximately 2 years from today. How fast will the company have to grow each year in order to reach the breakeven point by 2022? Working backwards from analyst estimates, it turns out that they expect the company to grow 74% 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.
We’re not going to go through company-specific developments for Workhorse Group given that this is a high-level summary, 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 would like to bring into light with Workhorse Group is it currently has negative equity on its balance sheet. This can sometimes arise from accounting methods used to deal with accumulated losses from prior years, which are viewed as liabilities carried forward until it cancels out in the future. These losses tend to occur only on paper, however, in other cases it can be forewarning.
There are too many aspects of Workhorse Group to cover in one brief article, but the key fundamentals for the company can all be found in one place – Workhorse Group’s company page on Simply Wall St. We’ve also compiled a list of essential aspects you should look at:
- Valuation: What is Workhorse Group 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 Workhorse Group is currently mispriced by the market.
- Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Workhorse Group’s board and the CEO’s background.
- 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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