Aemetis, Inc. (NASDAQ:AMTX): Are Analysts Optimistic?

Aemetis, Inc. (NASDAQ:AMTX) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. Aemetis, Inc. operates as a renewable natural gas and fuels, and bio-chemicals company in North America and India. On 31 December 2020, the US$354m market-cap company posted a loss of US$37m for its most recent financial year. The most pressing concern for investors is Aemetis' path to profitability – when will it breakeven? We've put together a brief outline of industry analyst expectations for the company, its year of breakeven and its implied growth rate.

Check out our latest analysis for Aemetis

According to the 5 industry analysts covering Aemetis, the consensus is that breakeven is near. They anticipate the company to incur a final loss in 2022, before generating positive profits of US$30m in 2023. So, the company is predicted to breakeven approximately 2 years from now. 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 64%, which is extremely buoyant. If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.

Underlying developments driving Aemetis' growth isn’t the focus of this broad overview, though, bear in mind that generally an energy business has lumpy cash flows which are contingent on the natural resource and stage at which the company is operating. So, 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 issue worth mentioning. Aemetis 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. Oftentimes, losses exist only on paper but other times, it can be a red flag.

Next Steps:

This article is not intended to be a comprehensive analysis on Aemetis, so if you are interested in understanding the company at a deeper level, take a look at Aemetis' company page on Simply Wall St. We've also compiled a list of relevant factors you should look at:

1. Valuation: What is Aemetis 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 Aemetis 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 Aemetis’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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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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