With the business potentially at an important milestone, we thought we'd take a closer look at NN, Inc.'s (NASDAQ:NNBR) future prospects. NN, Inc., a diversified industrial company, designs, manufactures, and sells high-precision components and assemblies primarily for the electrical, automotive, general industrial, aerospace and defense, and medical markets. On 31 December 2020, the US$312m market-cap company posted a loss of US$152m for its most recent financial year. Many investors are wondering about the rate at which NN will turn a profit, with the big question being “when will the company breakeven?” Below we will provide a high-level summary of the industry analysts’ expectations for the company.
According to the 4 industry analysts covering NN, the consensus is that breakeven is near. They expect the company to post a final loss in 2021, before turning a profit of US$479k in 2022. So, the company is predicted to breakeven just over a year from now. In order to meet this breakeven date, we calculated the rate at which the company must grow year-on-year. It turns out an average annual growth rate of 144% is expected, which is rather optimistic! Should the business grow at a slower rate, it will become profitable at a later date than expected.
We're not going to go through company-specific developments for NN given that this is a high-level summary, however, bear in mind that by and large 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 aspect worth mentioning. The company has managed its capital judiciously, with debt making up 28% 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.
There are key fundamentals of NN 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 NN, take a look at NN's company page on Simply Wall St. We've also compiled a list of key factors you should further research:
- Valuation: What is NN 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 NN 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 NN’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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