TPI Composites, Inc.'s (NASDAQ:TPIC) Path To Profitability

By
Simply Wall St
Published
April 19, 2022
NasdaqGM:TPIC
Source: Shutterstock

We feel now is a pretty good time to analyse TPI Composites, Inc.'s (NASDAQ:TPIC) business as it appears the company may be on the cusp of a considerable accomplishment. TPI Composites, Inc. manufactures and sells composite wind blades, and related precision molding and assembly systems to original equipment manufacturers (OEMs). The US$455m market-cap company announced a latest loss of US$166m on 31 December 2021 for its most recent financial year result. The most pressing concern for investors is TPI Composites' path to profitability – when will it breakeven? Below we will provide a high-level summary of the industry analysts’ expectations for the company.

View our latest analysis for TPI Composites

TPI Composites is bordering on breakeven, according to the 14 American Electrical analysts. They anticipate the company to incur a final loss in 2023, before generating positive profits of US$56m in 2024. The company is therefore projected to breakeven around 2 years from today. 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 96% is expected, 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.

earnings-per-share-growth
NasdaqGM:TPIC Earnings Per Share Growth April 19th 2022

Underlying developments driving TPI Composites' growth isn’t the focus of this broad overview, though, keep in mind 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 aspect worth mentioning. The company has managed its capital judiciously, with debt making up 18% 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.

Next Steps:

This article is not intended to be a comprehensive analysis on TPI Composites, so if you are interested in understanding the company at a deeper level, take a look at TPI Composites' company page on Simply Wall St. We've also put together a list of important aspects you should further research:

  1. Valuation: What is TPI Composites 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 TPI Composites 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 TPI Composites’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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