redT energy plc’s (LON:RED): redT energy plc, together with its subsidiaries, develops and supplies energy storage systems based on proprietary vanadium redox flow technology for on and off-grid applications. With the latest financial year loss of -UK£7.3m and a trailing-twelve month of -UK£10.1m, the UK£69.4m market-cap amplifies its loss by moving further away from its breakeven target. The most pressing concern for investors is RED’s path to profitability – when will it breakeven? Below I will provide a high-level summary of the industry analysts’ expectations for RED.
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According to the industry analysts covering RED, breakeven is near. They expect the company to post a final loss in 2019, before turning a profit of UK£8.3m in 2020. So, RED is predicted to breakeven approximately a few months from now. What rate will RED 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 63.6%, which is extremely buoyant. If this rate turns out to be too aggressive, RED may become profitable much later than analysts predict.
Underlying developments driving RED’s growth isn’t the focus of this broad overview, but, bear in mind that typically a high forecast growth rate is not unusual for a company that is currently undergoing an investment period.
Before I wrap up, there’s one aspect worth mentioning. RED currently has no debt on its balance sheet, which is quite unusual for a cash-burning loss-making, growth company, which usually has a high level of debt relative to its equity. RED currently operates purely off its shareholder funding and has no debt obligation, reducing concerns around repayments and making it a less risky investment.
Next Steps:
There are too many aspects of RED to cover in one brief article, but the key fundamentals for the company can all be found in one place – RED’s company page on Simply Wall St. I’ve also put together a list of important aspects you should further examine:
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Valuation: What is RED 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 RED 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 redT energy’s board and the CEO’s back ground.
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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.
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.