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Analysts Expect Breakeven For Surface Transforms Plc (LON:SCE)

Simply Wall St

Surface Transforms Plc's (LON:SCE): Surface Transforms Plc, together with its subsidiaries, designs, develops, manufactures, and sells carbon ceramic products for the brakes market in the United Kingdom and rest of Europe; the United States; and internationally. The UK£27m market-cap company announced a latest loss of -UK£2.1m on 31 May 2019 for its most recent financial year result. As path to profitability is the topic on SCE’s investors mind, I’ve decided to gauge market sentiment. In this article, I will touch on the expectations for SCE’s growth and when analysts expect the company to become profitable.

See our latest analysis for Surface Transforms

According to the 2 industry analysts covering SCE, the consensus is breakeven is near. They expect the company to post a final loss in 2021, before turning a profit of UK£800k in 2022. SCE is therefore projected to breakeven around 3 years from now. In order to meet this breakeven date, I calculated the rate at which SCE must grow year-on-year. It turns out an average annual growth rate of 69% is expected, which is rather optimistic! If this rate turns out to be too aggressive, SCE may become profitable much later than analysts predict.

AIM:SCE Past and Future Earnings, September 11th 2019

Underlying developments driving SCE’s growth isn’t the focus of this broad overview, however, take into account that by and large a high growth rate is not out of the ordinary, particularly when a company is in a period of investment.

Before I wrap up, there’s one aspect worth mentioning. SCE has managed its capital prudently, with debt making up 5.1% of equity. This means that SCE has predominantly funded its operations from equity capital,and its low debt obligation reduces the risk around investing in the loss-making company.

Next Steps:

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

  1. Historical Track Record: What has SCE'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.
  2. Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Surface Transforms’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.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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. Simply Wall St has no position in the stocks mentioned. Thank you for reading.