Lightning eMotors, Inc.'s (NYSE:ZEV) Shift From Loss To Profit

By
Simply Wall St
Published
August 10, 2021
NYSE:ZEV
Source: Shutterstock

We feel now is a pretty good time to analyse Lightning eMotors, Inc.'s (NYSE:ZEV) business as it appears the company may be on the cusp of a considerable accomplishment. Lightning eMotors, Inc. designs, manufactures, and sells electric vehicles. The US$850m market-cap company posted a loss in its most recent financial year of US$41m and a latest trailing-twelve-month loss of US$66m leading to an even wider gap between loss and breakeven. As path to profitability is the topic on Lightning eMotors' investors mind, we've decided to gauge market sentiment. Below we will provide a high-level summary of the industry analysts’ expectations for the company.

See our latest analysis for Lightning eMotors

Consensus from 4 of the American Machinery analysts is that Lightning eMotors is on the verge of breakeven. They anticipate the company to incur a final loss in 2022, before generating positive profits of US$19m in 2023. So, the company is predicted to breakeven approximately 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 76%, which signals high confidence from analysts. Should the business grow at a slower rate, it will become profitable at a later date than expected.

earnings-per-share-growth
NYSE:ZEV Earnings Per Share Growth August 11th 2021

Given this is a high-level overview, we won’t go into details of Lightning eMotors' upcoming projects, though, keep in mind 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. Lightning eMotors 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 Lightning eMotors, so if you are interested in understanding the company at a deeper level, take a look at Lightning eMotors' company page on Simply Wall St. We've also put together a list of relevant aspects you should look at:

  1. Valuation: What is Lightning eMotors 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 Lightning eMotors 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 Lightning eMotors’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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