When Will Electrovaya Inc (TSE:EFL) Breakeven?

Electrovaya Inc’s (TSE:EFL): Electrovaya Inc., together with its subsidiaries, designs, develops, manufactures, and markets lithium-ion based battery products in Canada, the United States, Germany, and internationally. The company’s loss has recently broadened since it announced a -US$21.2m loss in the full financial year, compared to the latest trailing-twelve-month loss of -US$25.9m, moving it further away from breakeven. Many investors are wondering the rate at which EFL will turn a profit, with the big question being “when will the company breakeven?” In this article, I will touch on the expectations for EFL’s growth and when analysts expect the company to become profitable.

See our latest analysis for Electrovaya

Expectation from Electrical analysts is EFL is on the verge of breakeven. They anticipate the company to incur a final loss in 2020, before generating positive profits of US$7.0m in 2021. So, EFL is predicted to breakeven approximately a couple of months from now! What rate will EFL have to grow year-on-year in order to breakeven on this date? Using a line of best fit, I calculated an average annual growth rate of 65.4%, which is extremely buoyant. If this rate turns out to be too aggressive, EFL may become profitable much later than analysts predict.

TSX:EFL Past Future Earnings September 19th 18

I’m not going to go through company-specific developments for EFL given that this is a high-level summary, though, take into account that generally a high growth rate is not out of the ordinary, particularly when a company is in a period of investment.

One thing I would like to bring into light with EFL is it 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:

There are too many aspects of EFL to cover in one brief article, but the key fundamentals for the company can all be found in one place – EFL’s company page on Simply Wall St. I’ve also put together a list of pertinent aspects you should further examine:

1. Valuation: What is EFL 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 EFL 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 Electrovaya’s board and the CEO’s back ground.

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.

To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.

The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.