Breakeven On The Horizon For Loop Industries, Inc. (NASDAQ:LOOP)

We feel now is a pretty good time to analyse Loop Industries, Inc.'s (NASDAQ:LOOP) business as it appears the company may be on the cusp of a considerable accomplishment. Loop Industries, Inc., a technology company, focuses on depolymerizing waste polyethylene terephthalate PET plastics and polyester fibers, including plastic bottles, packaging, carpets and textiles of any color, transparency and even ocean plastics that have been degraded by the sun and salt, to its base building blocks. The US$49m market-cap company posted a loss in its most recent financial year of US$21m and a latest trailing-twelve-month loss of US$27m leading to an even wider gap between loss and breakeven. Many investors are wondering about the rate at which Loop Industries will turn a profit, with the big question being “when will the company breakeven?” We've put together a brief outline of industry analyst expectations for the company, its year of breakeven and its implied growth rate.

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Consensus from 3 of the American Chemicals analysts is that Loop Industries is on the verge of breakeven. They anticipate the company to incur a final loss in 2026, before generating positive profits of US$19m in 2027. Therefore, the company is expected to breakeven roughly 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 69%, which signals high confidence from analysts. If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.

Underlying developments driving Loop Industries' growth isn’t the focus of this broad overview, though, take into account that typically a high growth rate is not out of the ordinary, particularly when a company is in a period of investment.

Check out our latest analysis for Loop Industries

One thing we would like to bring into light with Loop Industries is it 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 too many aspects of Loop Industries to cover in one brief article, but the key fundamentals for the company can all be found in one place – Loop Industries' company page on Simply Wall St. We've also put together a list of relevant factors you should look at:

1. Valuation: What is Loop Industries 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 Loop Industries 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 Loop Industries’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. 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. Simply Wall St has no position in any stocks mentioned.