Aemetis, Inc.'s (NASDAQ:AMTX) Profit Outlook

Aemetis, Inc. (NASDAQ:AMTX) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. Aemetis, Inc. operates as a renewable natural gas and renewable fuels company in North America and India. The US$214m market-cap company posted a loss in its most recent financial year of US$47m and a latest trailing-twelve-month loss of US$37m shrinking the gap between loss and breakeven. Many investors are wondering about the rate at which Aemetis 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.

Consensus from 4 of the American Oil and Gas analysts is that Aemetis is on the verge of breakeven. They expect the company to post a final loss in 2023, before turning a profit of US$6.3m in 2024. The company is therefore projected to breakeven around 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 73%, which is rather optimistic! If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.

Underlying developments driving Aemetis' growth isn’t the focus of this broad overview, but, keep in mind that generally an energy business has lumpy cash flows which are contingent on the natural resource and stage at which the company is operating. This means that a high growth rate is not unusual, especially if the company is currently in an investment period.

Before we wrap up, there’s one issue worth mentioning. Aemetis 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. Oftentimes, losses exist only on paper but other times, it can be a red flag.

Next Steps:

This article is not intended to be a comprehensive analysis on Aemetis, so if you are interested in understanding the company at a deeper level, take a look at Aemetis' company page on Simply Wall St. We've also compiled a list of relevant aspects you should look at:

1. Historical Track Record: What has Aemetis' 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 Aemetis' 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.

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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.