With the business potentially at an important milestone, we thought we'd take a closer look at Infrastructure and Energy Alternatives, Inc.'s (NASDAQ:IEA) future prospects. Infrastructure and Energy Alternatives, Inc., through its subsidiaries, operates as a diversified infrastructure construction company in the United States. With the latest financial year loss of US$85m and a trailing-twelve-month loss of US$91m, the US$492m market-cap company amplified its loss by moving further away from its breakeven target. Many investors are wondering about the rate at which Infrastructure and Energy Alternatives will turn a profit, with the big question being “when will the company breakeven?” Below we will provide a high-level summary of the industry analysts’ expectations for the company.
See our latest analysis for Infrastructure and Energy Alternatives
Consensus from 4 of the American Construction analysts is that Infrastructure and Energy Alternatives is on the verge of breakeven. They expect the company to post a final loss in 2021, before turning a profit of US$48m in 2022. So, the company is predicted to breakeven approximately a year from now or less! How fast will the company have to grow to reach the consensus forecasts that anticipate breakeven by 2022? Working backwards from analyst estimates, it turns out that they expect the company to grow 63% 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.
Given this is a high-level overview, we won’t go into details of Infrastructure and Energy Alternatives' upcoming projects, though, bear in mind that typically 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. Infrastructure and Energy Alternatives currently has a 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 Infrastructure and Energy Alternatives, so if you are interested in understanding the company at a deeper level, take a look at Infrastructure and Energy Alternatives' company page on Simply Wall St. We've also put together a list of pertinent factors you should further research:
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Valuation: What is Infrastructure and Energy Alternatives 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 Infrastructure and Energy Alternatives 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 Infrastructure and Energy Alternatives’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.