Cleantek Industries Inc. (CVE:CTEK) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. Cleantek Industries Inc. imagines, designs, patents, manufactures, and markets technology-based equipment for oil and gas, and construction industries in Western Canada and the United States. With the latest financial year loss of CA$3.6m and a trailing-twelve-month loss of CA$2.7m, the CA$5.0m market-cap company alleviated its loss by moving closer towards its target of breakeven. The most pressing concern for investors is Cleantek Industries' path to profitability – when will it breakeven? In this article, we will touch on the expectations for the company's growth and when analysts expect it to become profitable.
View our latest analysis for Cleantek Industries
Expectations from some of the Canadian Energy Services analysts is that Cleantek Industries is on the verge of breakeven. They expect the company to post a final loss in 2022, before turning a profit of CA$755k in 2023. The company is therefore projected to breakeven around 12 months from now or less. How fast will the company have to grow to reach the consensus forecasts that anticipate breakeven by 2023? Working backwards from analyst estimates, it turns out that they expect the company to grow 136% year-on-year, on average, which is rather optimistic! Should the business grow at a slower rate, it will become profitable at a later date than expected.
Underlying developments driving Cleantek Industries' growth isn’t the focus of this broad overview, though, take into account that typically energy companies, depending on the stage of operation and resource produced, 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 we would like to bring into light with Cleantek Industries is its debt-to-equity ratio of over 2x. Generally, the rule of thumb is debt shouldn’t exceed 40% of your equity, which in this case, the company has significantly overshot. Note that a higher debt obligation increases the risk in investing in the loss-making company.
Next Steps:
This article is not intended to be a comprehensive analysis on Cleantek Industries, so if you are interested in understanding the company at a deeper level, take a look at Cleantek Industries' company page on Simply Wall St. We've also compiled a list of relevant factors you should look at:
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Valuation: What is Cleantek Industries 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 Cleantek Industries is currently mispriced by the market.
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Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Cleantek Industries’s board and the CEO’s background.
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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.