NN, Inc.'s (NASDAQ:NNBR) Profit Outlook

With the business potentially at an important milestone, we thought we'd take a closer look at NN, Inc.'s (NASDAQ:NNBR) future prospects. NN, Inc., a diversified industrial company, designs, manufactures, and sells high-precision components and assemblies primarily for the electrical, automotive, general industrial, aerospace and defense, and medical markets. The US$227m market-cap company posted a loss in its most recent financial year of US$152m and a latest trailing-twelve-month loss of US$47m shrinking the gap between loss and breakeven. Many investors are wondering about the rate at which NN will turn a profit, with the big question being “when will the company breakeven?” We've put together a brief outline of industry analyst expectations for the company, its year of breakeven and its implied growth rate.

View our latest analysis for NN

According to the 2 industry analysts covering NN, the consensus is that breakeven is near. They anticipate the company to incur a final loss in 2021, before generating positive profits of US$8.8m in 2022. So, the company is predicted to breakeven just over a year from now. 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 105%, which is extremely buoyant. Should the business grow at a slower rate, it will become profitable at a later date than expected.

earnings-per-share-growth

We're not going to go through company-specific developments for NN given that this is a high-level summary, however, 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 issue worth mentioning. NN currently has a relatively high level of debt. Typically, debt shouldn’t exceed 40% of your equity, which in NN's case is 55%. Note that a higher debt obligation increases the risk around investing in the loss-making company.

Next Steps:

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

1. Valuation: What is NN 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 NN is currently mispriced by the market.

2. Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on NN’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. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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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