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FreightCar America, Inc. (NASDAQ:RAIL) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. FreightCar America, Inc., through its subsidiaries, engages in design, manufacture, and sale of railcars and railcar components for the transportation of bulk commodities and containerized freight products in the United States and Mexico. The US$234m market-cap company posted a loss in its most recent financial year of US$34m and a latest trailing-twelve-month loss of US$131m leading to an even wider gap between loss and breakeven. Many investors are wondering about the rate at which FreightCar America will turn a profit, with the big question being “when will the company breakeven?” 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 FreightCar America
FreightCar America is bordering on breakeven, according to the 2 American Machinery analysts. They anticipate the company to incur a final loss in 2024, before generating positive profits of US$26m in 2025. The company is therefore projected to breakeven around a year from now or less! How fast will the company have to grow to reach the consensus forecasts that anticipate breakeven by 2025? Working backwards from analyst estimates, it turns out that they expect the company to grow 59% year-on-year, on average, which signals high confidence from analysts. If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.
Underlying developments driving FreightCar America's growth isn’t the focus of this broad overview, though, bear in mind that generally a high growth rate is not out of the ordinary, particularly when a company is in a period of investment.
Before we wrap up, there’s one issue worth mentioning. FreightCar America currently has negative equity on its balance sheet. This can sometimes arise from accounting methods used to deal with accumulated losses from prior years, which are viewed as liabilities carried forward until it cancels out in the future. These losses tend to occur only on paper, however, in other cases it can be forewarning.
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There are key fundamentals of FreightCar America which are not covered in this article, but we must stress again that this is merely a basic overview. For a more comprehensive look at FreightCar America, take a look at FreightCar America's company page on Simply Wall St. We've also put together a list of key factors you should further research: