We feel now is a pretty good time to analyse Aspen Aerogels, Inc.'s (NYSE:ASPN) business as it appears the company may be on the cusp of a considerable accomplishment. Aspen Aerogels, Inc. designs, develops, manufactures, and sells aerogel insulation products primarily for use in the energy infrastructure and building materials markets in the United States, Asia, Canada, Europe, and Latin America. On 31 December 2020, the US$553m market-cap company posted a loss of US$22m for its most recent financial year. As path to profitability is the topic on Aspen Aerogels' investors mind, we've decided to gauge market sentiment. We've put together a brief outline of industry analyst expectations for the company, its year of breakeven and its implied growth rate.
Aspen Aerogels is bordering on breakeven, according to the 4 American Energy Services analysts. They anticipate the company to incur a final loss in 2022, before generating positive profits of US$3.4m in 2023. Therefore, the company is expected to breakeven roughly 2 years from today. How fast will the company have to grow each year in order to reach the breakeven point by 2023? Working backwards from analyst estimates, it turns out that they expect the company to grow 47% year-on-year, on average, which is extremely buoyant. Should the business grow at a slower rate, it will become profitable at a later date than expected.
Given this is a high-level overview, we won’t go into details of Aspen Aerogels' upcoming projects, though, take into account that by and large 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 aspect worth mentioning. The company has managed its capital prudently, with debt making up 5.4% 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.
There are key fundamentals of Aspen Aerogels 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 Aspen Aerogels, take a look at Aspen Aerogels' company page on Simply Wall St. We've also put together a list of key aspects you should look at:
- Valuation: What is Aspen Aerogels 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 Aspen Aerogels is currently mispriced by the market.
- Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Aspen Aerogels’s board and the CEO’s background.
- 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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