Breakeven On The Horizon For Babcock & Wilcox Enterprises Inc (NYSE:BW)

Babcock & Wilcox Enterprises Inc's (NYSE:BW): Babcock & Wilcox Enterprises, Inc. provides fossil and renewable power generation and environmental equipment for the power and industrial markets worldwide. The US$303.94M market-cap posted a loss in its most recent financial year of -US$115.65M and a latest trailing-twelve-month loss of -US$343.91M leading to an even wider gap between loss and breakeven. As path to profitability is the topic on BW’s investors mind, I’ve decided to gauge market sentiment. I’ve put together a brief outline of industry analyst expectations for BW, its year of breakeven and its implied growth rate.

BW is bordering on breakeven, according to analysts. They expect the company to post a final loss in 2018, before turning a profit of US$5.55M in 2019. BW is therefore projected to breakeven around a few months from now. How fast will BW have to grow each year in order to reach the breakeven point by 2019? Working backwards from analyst estimates, it turns out that they expect the company to grow 101.24% year-on-year, on average, which signals high confidence from analysts. Should the business grow at a slower rate, it will become profitable at a later date than expected.

I’m not going to go through company-specific developments for BW given that this is a high-level summary, though, bear in mind that by and large a high forecast growth rate is not unusual for a company that is currently undergoing an investment period.

Before I wrap up, there’s one issue worth mentioning. BW currently has a relatively high level of debt. Typically, debt shouldn’t exceed 40% of your equity, which in BW’s case is 71.13%. A higher level of debt requires more stringent capital management which increases the risk in investing in the loss-making company.

Next Steps:

There are too many aspects of BW to cover in one brief article, but the key fundamentals for the company can all be found in one place – BW’s company page on Simply Wall St. I’ve also put together a list of important factors you should further research:

1. Valuation: What is BW 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 BW 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 Babcock & Wilcox Enterprises’s board and the CEO’s back ground.
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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Simply Wall St analyst Simply Wall St and Simply Wall St have no position in any of the companies mentioned. This article is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.