Constellium NV’s (NYSE:CSTM): Constellium N.V. engages in the design, manufacture, and sale of specialty rolled and extruded aluminum products for the aerospace, packaging, and automotive end-markets. The US$1.68B market-cap company announced a latest loss of -€31.00M on 31 December 2017 for its most recent financial year result. The most pressing concern for investors is CSTM’s path to profitability – when will it breakeven? In this article, I will touch on the expectations for CSTM’s growth and when analysts expect the company to become profitable.

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CSTM is bordering on breakeven, according to analysts. They anticipate the company to incur a final loss in 2017, before generating positive profits of €119.51M in 2018. Therefore, CSTM is expected to breakeven roughly a couple of months from now! In order to meet this breakeven date, I calculated the rate at which CSTM must grow year-on-year. It turns out an average annual growth rate of 68.24% is expected, which is extremely buoyant. Should the business grow at a slower rate, it will become profitable at a later date than expected.

Underlying developments driving CSTM’s growth isn’t the focus of this broad overview, though, bear in mind that by and large metals and mining companies, depending on the stage of operation and metals mined, have irregular periods of cash flow. This means that a high growth rate is not unusual, especially if the company is currently in an investment period.

One thing I would like to bring into light with CSTM is it currently has negative equity on its balance sheet. Accounting methods used to deal with losses accumulated over time can cause this to occur. This is because liabilities are carried forward into the future until it cancels. Oftentimes, losses exist only on paper but other times, it can be a red flag.

Next Steps:

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

1. Valuation: What is CSTM 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 CSTM 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 Constellium’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.