Breakeven On The Horizon For Capstone Green Energy Corporation (NASDAQ:CGRN)

By
Simply Wall St
Published
April 21, 2022
NasdaqCM:CGRN
Source: Shutterstock

We feel now is a pretty good time to analyse Capstone Green Energy Corporation's (NASDAQ:CGRN) business as it appears the company may be on the cusp of a considerable accomplishment. Capstone Green Energy Corporation develops, manufactures, markets, and services microturbine technology solutions for use in stationary distributed power generation and distribution networks applications worldwide. The US$51m market-cap company posted a loss in its most recent financial year of US$18m and a latest trailing-twelve-month loss of US$18m shrinking the gap between loss and breakeven. As path to profitability is the topic on Capstone Green Energy's investors mind, we've decided to gauge market sentiment. We've put together a brief outline of industry analyst expectations for the company, its year of breakeven and its implied growth rate.

Check out our latest analysis for Capstone Green Energy

According to the 3 industry analysts covering Capstone Green Energy, the consensus is that breakeven is near. They anticipate the company to incur a final loss in 2024, before generating positive profits of US$5.4m in 2025. Therefore, the company is expected to breakeven roughly 3 years from today. How fast will the company have to grow each year in order to reach the breakeven point by 2025? Working backwards from analyst estimates, it turns out that they expect the company to grow 60% year-on-year, on average, which is rather optimistic! Should the business grow at a slower rate, it will become profitable at a later date than expected.

earnings-per-share-growth
NasdaqCM:CGRN Earnings Per Share Growth April 21st 2022

Given this is a high-level overview, we won’t go into details of Capstone Green Energy's upcoming projects, but, keep in mind that typically a high forecast growth rate is not unusual for a company that is currently undergoing an investment period.

Before we wrap up, there’s one issue worth mentioning. Capstone Green Energy currently has a debt-to-equity ratio of over 2x. Generally, the rule of thumb is debt shouldn’t exceed 40% of your equity, which in this case, the company has significantly overshot. Note that a higher debt obligation increases the risk around investing in the loss-making company.

Next Steps:

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

  1. Historical Track Record: What has Capstone Green Energy'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 Capstone Green Energy'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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