Yahoo Movies American Axle & Manufacturing Holdings, Inc. (NYSE:AXL) Is About To Turn The Corner
We feel now is a pretty good time to analyse American Axle & Manufacturing Holdings, Inc.'s (NYSE:AXL) business as it appears the company may be on the cusp of a considerable accomplishment. American Axle & Manufacturing Holdings, Inc., together with its subsidiaries, designs, engineers, and manufactures driveline and metal forming products in the United States, Mexico, South America, China, other Asian countries, and Europe. On 31 December 2020, the US$1.2b market-cap company posted a loss of US$561m for its most recent financial year. The most pressing concern for investors is American Axle & Manufacturing Holdings' 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 American Axle & Manufacturing Holdings
According to the 6 industry analysts covering American Axle & Manufacturing Holdings, the consensus is that breakeven is near. They expect the company to post a final loss in 2020, before turning a profit of US$148m in 2021. The company is therefore projected to breakeven around a year 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 95% is expected, which is rather optimistic! Should the business grow at a slower rate, it will become profitable at a later date than expected.
We're not going to go through company-specific developments for American Axle & Manufacturing Holdings given that this is a high-level summary, though, keep in mind that generally a high forecast growth rate is not unusual for a company that is currently undergoing an investment period.
Before we wrap up, there’s one issue worth mentioning. American Axle & Manufacturing Holdings currently has a debt-to-equity ratio of over 2x. Generally, the rule of thumb is debt shouldn’t exceed 40% of your equity, which in this case, the company has significantly overshot. A higher level of debt requires more stringent capital management which increases the risk around investing in the loss-making company.
Next Steps:
This article is not intended to be a comprehensive analysis on American Axle & Manufacturing Holdings, so if you are interested in understanding the company at a deeper level, take a look at American Axle & Manufacturing Holdings' company page on Simply Wall St. We've also put together a list of pertinent aspects you should look at:
Valuation: What is American Axle & Manufacturing Holdings 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 American Axle & Manufacturing Holdings is currently mispriced by the market.
Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on American Axle & Manufacturing Holdings’s board and the CEO’s background.
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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