When Will BluGlass Limited (ASX:BLG) Become Profitable?

We feel now is a pretty good time to analyse BluGlass Limited's (ASX:BLG) business as it appears the company may be on the cusp of a considerable accomplishment. BluGlass Limited, together with its subsidiaries, engages in the research and manufacture of Gallium nitrides in Australia. On 30 June 2020, the AU$61m market-cap company posted a loss of AU$6.0m for its most recent financial year. The most pressing concern for investors is BluGlass' 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 BluGlass

Expectations from some of the Australian Semiconductor analysts is that BluGlass is on the verge of breakeven. They expect the company to post a final loss in 2021, before turning a profit of AU$429k in 2022. So, the company is predicted to breakeven approximately 2 years from today. What rate will the company have to grow year-on-year in order to breakeven on this date? Using a line of best fit, we calculated an average annual growth rate of 90%, 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.

earnings-per-share-growth

Given this is a high-level overview, we won’t go into details of BluGlass' upcoming projects, though, bear in mind that by and large 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 aspect worth mentioning. BluGlass currently has no debt on its balance sheet, which is rare for a loss-making loss-making, growth company, which usually has a high level of debt relative to its equity. The company 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 key fundamentals of BluGlass 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 BluGlass, take a look at BluGlass' company page on Simply Wall St. We've also put together a list of key aspects you should look at:

1. Historical Track Record: What has BluGlass' performance been like over the past? Go into more detail in the past track record analysis and take a look at the free visual representations of our analysis for more clarity.

2. Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on BluGlass' board and the CEO’s background.

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.

This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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