Nel ASA’s (OB:NEL): Nel ASA, a hydrogen company, delivers various solutions to produce, store, and distribute hydrogen from renewable energy worldwide. The company’s loss has recently broadened since it announced a -øre52.4m loss in the full financial year, compared to the latest trailing-twelve-month loss of -øre111.7m, moving it further away from breakeven. The most pressing concern for investors is NEL’s path to profitability – when will it breakeven? I’ve put together a brief outline of industry analyst expectations for NEL, its year of breakeven and its implied growth rate.

View our latest analysis for Nel

According to the 2 industry analysts covering NEL, the consensus is breakeven is near. They anticipate the company to incur a final loss in 2020, before generating positive profits of øre94m in 2021. Therefore, NEL is expected to breakeven roughly 3 years from now. What rate will NEL have to grow year-on-year in order to breakeven on this date? Using a line of best fit, I calculated an average annual growth rate of 79%, which signals high confidence from analysts. Should the business grow at a slower rate, it will become profitable at a later date than expected.

I’m not going to go through company-specific developments for NEL given that this is a high-level summary, however, take into account that by and large a high forecast growth rate is not unusual for a company that is currently undergoing an investment period.

One thing I’d like to point out is that NEL has managed its capital prudently, with debt making up 3.3% of equity. This means that NEL 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 NEL, so if you are interested in understanding the company at a deeper level, take a look at NEL’s company page on Simply Wall St. I’ve also compiled a list of essential factors you should look at:

1. Historical Track Record: What has NEL’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 Nel’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 past 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. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.