Stem, Inc. (NYSE:STEM) Is Expected To Breakeven In The Near Future

We feel now is a pretty good time to analyse Stem, Inc.'s (NYSE:STEM) business as it appears the company may be on the cusp of a considerable accomplishment. Stem, Inc. operates as an energy technology company in the United States. With the latest financial year loss of US$166m and a trailing-twelve-month loss of US$221m, the US$3.7b market-cap company amplified its loss by moving further away from its breakeven target. The most pressing concern for investors is Stem's path to profitability – when will it breakeven? In this article, we will touch on the expectations for the company's growth and when analysts expect it to become profitable.

Check out our latest analysis for Stem

Consensus from 4 of the American Electrical analysts is that Stem is on the verge of breakeven. They expect the company to post a final loss in 2022, before turning a profit of US$48m in 2023. The company is therefore projected to breakeven around 2 years from today. What rate will the company have to grow year-on-year in order to breakeven on this date? Using a line of best fit, we calculated an average annual growth rate of 69%, 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 Stem given that this is a high-level summary, though, take into account that generally 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. Stem currently has negative equity on its balance sheet. This can sometimes arise from accounting methods used to deal with accumulated losses from prior years, which are viewed as liabilities carried forward until it cancels out in the future. Oftentimes, losses exist only on paper but other times, it can be a red flag.

Next Steps:

There are key fundamentals of Stem 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 Stem, take a look at Stem's company page on Simply Wall St. We've also put together a list of pertinent aspects you should further research:

1. Valuation: What is Stem 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 Stem 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 Stem’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.

When trading Stem or any other investment, use the platform considered by many to be the Professional's Gateway to the Worlds Market, Interactive Brokers. You get the lowest-cost* trading on stocks, options, futures, forex, bonds and funds worldwide from a single integrated account. Promoted

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.
^*Interactive Brokers Rated Lowest Cost Broker by StockBrokers.com Annual Online Review 2020

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.