We feel now is a pretty good time to analyse American Axle & Manufacturing Holdings, Inc.'s (NYSE:AXL) business as it appears the company may be on the cusp of a considerable accomplishment. American Axle & Manufacturing Holdings, Inc., together with its subsidiaries, designs, engineers, and manufactures driveline and metal forming products in the United States, Mexico, South America, China, other Asian countries, and Europe. With the latest financial year loss of US$561m and a trailing-twelve-month loss of US$23m, the US$1.4b market-cap company alleviated its loss by moving closer towards its target of breakeven. As path to profitability is the topic on American Axle & Manufacturing Holdings' investors mind, we've decided to gauge market sentiment. Below we will provide a high-level summary of the industry analysts’ expectations for the company.
American Axle & Manufacturing Holdings is bordering on breakeven, according to the 8 American Auto Components analysts. They expect the company to post a final loss in 2020, before turning a profit of US$157m in 2021. So, the company is predicted to breakeven approximately a year from now or less! How fast will the company have to grow to reach the consensus forecasts that anticipate breakeven by 2021? Working backwards from analyst estimates, it turns out that they expect the company to grow 51% year-on-year, on average, which signals high confidence from analysts. 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 American Axle & Manufacturing Holdings given that this is a high-level summary, however, bear in mind that typically 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 American Axle & Manufacturing Holdings is its debt-to-equity ratio of over 2x. Typically, debt shouldn’t exceed 40% of your equity, which in this case, the company has significantly overshot. A higher level of debt requires more stringent capital management which increases the risk in investing in the loss-making company.
This article is not intended to be a comprehensive analysis on American Axle & Manufacturing Holdings, so if you are interested in understanding the company at a deeper level, take a look at American Axle & Manufacturing Holdings' company page on Simply Wall St. We've also put together a list of relevant aspects you should look at:
- Valuation: What is American Axle & Manufacturing Holdings 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 American Axle & Manufacturing Holdings 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 American Axle & Manufacturing Holdings’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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