When Can We Expect A Profit From Surface Transforms Plc (LON:SCE)?

With the business potentially at an important milestone, we thought we'd take a closer look at Surface Transforms Plc's (LON:SCE) future prospects. 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. With the latest financial year loss of UK£2.3m and a trailing-twelve-month loss of UK£2.6m, the UK£133m market-cap company amplified its loss by moving further away from its breakeven target. As path to profitability is the topic on Surface Transforms' 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.

See our latest analysis for Surface Transforms

Consensus from 3 of the British Auto Components analysts is that Surface Transforms is on the verge of breakeven. They anticipate the company to incur a final loss in 2021, before generating positive profits of UK£2.5m in 2022. So, the company is predicted to breakeven just over a year from now. In order to meet this breakeven date, we calculated the rate at which the company must grow year-on-year. It turns out an average annual growth rate of 92% is expected, which is rather optimistic! If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.

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Given this is a high-level overview, we won’t go into details of Surface Transforms' upcoming projects, but, bear in mind that by and large 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 8.2% 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.

Next Steps:

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

1. Historical Track Record: What has Surface Transforms' 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' board and the CEO’s background.

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.

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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