We feel now is a pretty good time to analyse EMCORE Corporation's (NASDAQ:EMKR) business as it appears the company may be on the cusp of a considerable accomplishment. EMCORE Corporation, together with its subsidiaries, provides advanced mixed-signal optics products in the United States, Canada, Asia, Europe, and internationally. The US$281m market-cap company posted a loss in its most recent financial year of US$7.0m and a latest trailing-twelve-month loss of US$3.1m shrinking the gap between loss and breakeven. Many investors are wondering about the rate at which EMCORE 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.
EMCORE is bordering on breakeven, according to the 2 American Communications analysts. They expect the company to post a final loss in 2020, before turning a profit of US$11m in 2021. The company is therefore projected to breakeven around 12 months from now or less. We calculated the rate at which the company must grow to meet the consensus forecasts predicting breakeven within 12 months. It turns out an average annual growth rate of 91% is expected, 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 EMCORE's growth isn’t the focus of this broad overview, but, keep in mind that typically 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 aspect worth mentioning. The company has managed its capital prudently, with debt making up 8.4% 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 too many aspects of EMCORE to cover in one brief article, but the key fundamentals for the company can all be found in one place – EMCORE's company page on Simply Wall St. We've also put together a list of essential factors you should further research:
- Historical Track Record: What has EMCORE's 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.
- Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on EMCORE'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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