Loop Industries, Inc. (NASDAQ:LOOP): Are Analysts Optimistic?

With the business potentially at an important milestone, we thought we'd take a closer look at Loop Industries, Inc.'s (NASDAQ:LOOP) future prospects. Loop Industries, Inc., a technology company, focuses on depolymerizing waste polyethylene terephthalate (PET) plastics and polyester fibers into its base building block monomers. With the latest financial year loss of US$12m and a trailing-twelve-month loss of US$12m, the US$29m market-cap company alleviated its loss by moving closer towards its target of breakeven. The most pressing concern for investors is Loop Industries' 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.

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According to the 2 industry analysts covering Loop Industries, the consensus is that breakeven is near. They expect the company to post a final loss in 2027, before turning a profit of US$1.9m in 2028. 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 2028? Working backwards from analyst estimates, it turns out that they expect the company to grow 62% year-on-year, on average, 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.

Given this is a high-level overview, we won’t go into details of Loop Industries' upcoming projects, but, 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.

See our latest analysis for Loop Industries

Before we wrap up, there’s one issue worth mentioning. Loop Industries 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 Loop Industries, so if you are interested in understanding the company at a deeper level, take a look at Loop Industries' company page on Simply Wall St. We've also put together a list of essential factors you should look at:

1. Historical Track Record: What has Loop Industries' performance been like over the past? Go into more detail in the past track record analysis and take a look at the free visual representations of our analysis for more clarity.
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' 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.