With the business potentially at an important milestone, we thought we'd take a closer look at Innergex Renewable Energy Inc.'s (TSE:INE) future prospects. Innergex Renewable Energy Inc. operates as an independent renewable power producer in Canada, the United States, France, and Chile. The CA$3.3b market-cap company posted a loss in its most recent financial year of CA$197m and a latest trailing-twelve-month loss of CA$44m shrinking the gap between loss and breakeven. As path to profitability is the topic on Innergex Renewable Energy's investors mind, we've decided to gauge market sentiment. In this article, we will touch on the expectations for the company's growth and when analysts expect it to become profitable.
Innergex Renewable Energy is bordering on breakeven, according to the 7 Canadian Renewable Energy analysts. They expect the company to post a final loss in 2022, before turning a profit of CA$97m in 2023. So, the company is predicted to breakeven just over a year from now. 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 64% year-on-year, on average, which signals high confidence from analysts. Should the business grow at a slower rate, it will become profitable at a later date than expected.
We're not going to go through company-specific developments for Innergex Renewable Energy given that this is a high-level summary, but, bear in mind that generally a high forecast growth rate is not unusual for a company that is currently undergoing an investment period.
One thing we would like to bring into light with Innergex Renewable Energy is its debt-to-equity ratio of over 2x. Generally, the rule of thumb is debt shouldn’t exceed 40% of your equity, and the company has considerably exceeded this. A higher level of debt requires more stringent capital management which increases the risk around investing in the loss-making company.
There are too many aspects of Innergex Renewable Energy to cover in one brief article, but the key fundamentals for the company can all be found in one place – Innergex Renewable Energy's company page on Simply Wall St. We've also compiled a list of relevant factors you should further examine:
Valuation: What is Innergex Renewable Energy 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 Innergex Renewable Energy 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 Innergex Renewable Energy’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. 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.
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