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Loss-Making UGE International Ltd. (CVE:UGE) Expected To Breakeven In The Medium-Term

Simply Wall St
·3-min read

With the business potentially at an important milestone, we thought we'd take a closer look at UGE International Ltd.'s (CVE:UGE) future prospects. UGE International Ltd., a solar and renewable energy solutions company, provides commercial and community solar energy solutions to commercial and industrial clients in Canada, the United States, and the Philippines. The CA$66m market-cap company posted a loss in its most recent financial year of US$2.5m and a latest trailing-twelve-month loss of US$1.4m shrinking the gap between loss and breakeven. The most pressing concern for investors is UGE International's 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.

See our latest analysis for UGE International

According to some industry analysts covering UGE International, breakeven is near. They expect the company to post a final loss in 2021, before turning a profit of US$915k in 2022. The company is therefore projected to breakeven just over a year 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 82%, which is rather optimistic! If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.

earnings-per-share-growth
earnings-per-share-growth

Underlying developments driving UGE International's growth isn’t the focus of this broad overview, but, take into account that by and large a high growth rate is not out of the ordinary, particularly when a company is in a period of investment.

One thing we would like to bring into light with UGE International is it currently has negative equity on its balance sheet. Accounting methods used to deal with losses accumulated over time can cause this to occur. This is because liabilities are carried forward into the future until it cancels. These losses tend to occur only on paper, however, in other cases it can be forewarning.

Next Steps:

There are too many aspects of UGE International to cover in one brief article, but the key fundamentals for the company can all be found in one place – UGE International's company page on Simply Wall St. We've also compiled a list of essential factors you should further research:

  1. Historical Track Record: What has UGE International's 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 UGE International's 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.