Loss-Making Atlantic Power Corporation (TSE:ATP) Expected To Breakeven

Atlantic Power Corporation’s (TSE:ATP): Atlantic Power Corporation owns and operates a fleet of power generation assets in the United States and Canada. With the latest financial year loss of -CA$98.60m and a trailing-twelve month of -CA$80.00m, the CA$337.44m market-cap alleviates its loss by moving closer towards its target of breakeven. As path to profitability is the topic on ATP’s investors mind, I’ve decided to gauge market sentiment. In this article, I will touch on the expectations for ATP’s growth and when analysts expect the company to become profitable.

See our latest analysis for Atlantic Power

According to the industry analysts covering ATP, breakeven is near. They anticipate the company to incur a final loss in -1, before generating positive profits of CA$0 in . Therefore, ATP is expected to breakeven roughly a few months from now. How fast will ATP have to grow each year in order to reach the breakeven point by ? Working backwards from analyst estimates, it turns out that they expect the company to grow 69.26% year-on-year, on average, which is extremely buoyant. Should the business grow at a slower rate, it will become profitable at a later date than expected.

TSX:ATP Past Future Earnings June 25th 18

I’m not going to go through company-specific developments for ATP given that this is a high-level summary, though, keep in mind that typically a high forecast growth rate is not unusual for a company that is currently undergoing an investment period.

One thing I would like to bring into light with ATP is its debt-to-equity ratio of over 2x. Generally, the rule of thumb is debt shouldn’t exceed 40% of your equity, which in ATP’s case, it has significantly overshot. A higher level of debt requires more stringent capital management which increases the risk around investing in the loss-making company.

Next Steps:

This article is not intended to be a comprehensive analysis on ATP, so if you are interested in understanding the company at a deeper level, take a look at ATP’s company page on Simply Wall St. I’ve also put together a list of relevant factors you should further examine:

1. Valuation: What is ATP 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 ATP 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 Atlantic Power’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 pass 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.