Infrastructure and Energy Alternatives, Inc.'s (NASDAQ:IEA) Has Found A Path To Profitability

With the business potentially at an important milestone, we thought we'd take a closer look at Infrastructure and Energy Alternatives, Inc.'s (NASDAQ:IEA) future prospects. Infrastructure and Energy Alternatives, Inc., through various subsidiaries, operates as a diversified infrastructure construction company in the United States. The US$296m market-cap company announced a latest loss of US$1.9m on 31 December 2020 for its most recent financial year result. As path to profitability is the topic on Infrastructure and Energy Alternatives' 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.

See our latest analysis for Infrastructure and Energy Alternatives

Infrastructure and Energy Alternatives is bordering on breakeven, according to some American Construction analysts. They expect the company to post a final loss in 2020, before turning a profit of US$9.9m in 2021. So, the company is predicted to breakeven approximately 12 months from now or less. At what rate will the company have to grow in order to realise the consensus estimates forecasting breakeven in under 12 months? Using a line of best fit, we calculated an average annual growth rate of 115%, 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 Infrastructure and Energy Alternatives given that this is a high-level summary, though, take into account that typically 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. Infrastructure and Energy Alternatives currently has negative equity on its balance sheet. Accounting methods used to deal with losses accumulated over time can cause this to occur. This is because liabilities are carried forward into the future until it cancels. These losses tend to occur only on paper, however, in other cases it can be forewarning.

Next Steps:

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

1. Valuation: What is Infrastructure and Energy Alternatives 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 Infrastructure and Energy Alternatives 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 Infrastructure and Energy Alternatives’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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