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Analysts Expect Top Ships Inc. (NASDAQ:TOPS) To Breakeven Soon

Top Ships Inc. (NASDAQ:TOPS) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. Top Ships Inc. owns and operates tanker vessels worldwide. The US$53m market-cap company announced a latest loss of US$29m on 31 December 2020 for its most recent financial year result. The most pressing concern for investors is Top Ships' path to profitability – when will it 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 Top Ships

Top Ships is bordering on breakeven, according to some American Oil and Gas analysts. They expect the company to post a final loss in 2020, before turning a profit of US$7.5m in 2021. So, the company is predicted to breakeven approximately 12 months from now or less. We calculated the rate at which the company must grow to meet the consensus forecasts predicting breakeven within 12 months. It turns out an average annual growth rate of 117% is expected, which is extremely buoyant. 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

We're not going to go through company-specific developments for Top Ships given that this is a high-level summary, however, take into account that generally an energy business has lumpy cash flows which are contingent on the natural resource and stage at which the company is operating. So, 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 Top Ships is its relatively high level of debt. Generally, the rule of thumb is debt shouldn’t exceed 40% of your equity, which in Top Ships' case is 78%. Note that a higher debt obligation increases the risk in investing in the loss-making company.

Next Steps:

There are key fundamentals of Top Ships 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 Top Ships, take a look at Top Ships' company page on Simply Wall St. We've also compiled a list of key aspects you should further examine:

  1. Historical Track Record: What has Top Ships' 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 Top Ships' 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.

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