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Market Sentiment Around Loss-Making CAP-XX Limited (LON:CPX)

We feel now is a pretty good time to analyse CAP-XX Limited's (LON:CPX) business as it appears the company may be on the cusp of a considerable accomplishment. CAP-XX Limited, together with its subsidiaries, develops, manufactures, and sells supercapacitors primarily in the Asia Pacific, Europe, and North America. The company’s loss has recently broadened since it announced a AU$4.9m loss in the full financial year, compared to the latest trailing-twelve-month loss of AU$5.8m, moving it further away from breakeven. The most pressing concern for investors is CAP-XX's path to profitability – when will it breakeven? Below we will provide a high-level summary of the industry analysts’ expectations for the company.

See our latest analysis for CAP-XX

According to the 2 industry analysts covering CAP-XX, the consensus is that breakeven is near. They expect the company to post a final loss in 2024, before turning a profit of AU$1.7m in 2025. The company is therefore projected to breakeven around 2 years from today. How fast will the company have to grow each year in order to reach the breakeven point by 2025? Working backwards from analyst estimates, it turns out that they expect the company to grow 99% year-on-year, on average, which is rather optimistic! If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.

earnings-per-share-growth
earnings-per-share-growth

We're not going to go through company-specific developments for CAP-XX 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.

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Before we wrap up, there’s one aspect worth mentioning. CAP-XX currently has no debt on its balance sheet, which is rare for a loss-making growth company, which usually has a high level of debt relative to its equity. This means that the company has been operating purely on its equity investment and has no debt burden. This aspect reduces the risk around investing in the loss-making company.

Next Steps:

This article is not intended to be a comprehensive analysis on CAP-XX, so if you are interested in understanding the company at a deeper level, take a look at CAP-XX's company page on Simply Wall St. We've also compiled a list of relevant aspects you should look at:

  1. Historical Track Record: What has CAP-XX'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 CAP-XX's 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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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