FreightCar America, Inc.’s (NASDAQ:RAIL) Path To Profitability

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With the business potentially at an important milestone, we thought we'd take a closer look at FreightCar America, Inc.'s (NASDAQ:RAIL) future prospects. FreightCar America, Inc., through its subsidiaries, engages in design, manufacture, and sale of railcars and railcar components for the transportation of bulk commodities and containerized freight products in the United States and Mexico. The US$67m market-cap company posted a loss in its most recent financial year of US$34m and a latest trailing-twelve-month loss of US$13m shrinking the gap between loss and breakeven. Many investors are wondering about the rate at which FreightCar America will turn a profit, with the big question being “when will the company breakeven?” In this article, we will touch on the expectations for the company's growth and when analysts expect it to become profitable.

Check out our latest analysis for FreightCar America

According to some industry analysts covering FreightCar America, breakeven is near. They expect the company to post a final loss in 2024, before turning a profit of US$13m in 2025. The company is therefore projected to breakeven just over a year from today. In order to meet this breakeven date, we calculated the rate at which the company must grow year-on-year. It turns out an average annual growth rate of 154% is expected, which signals high confidence from analysts. If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.

earnings-per-share-growth

Underlying developments driving FreightCar America's growth isn’t the focus of this broad overview, though, bear 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 aspect worth mentioning. FreightCar America currently has no debt on its balance sheet, which is quite unusual for a cash-burning growth company, which usually has a high level of debt relative to its equity. The company currently operates purely off its shareholder funding and has no debt obligation, reducing concerns around repayments and making it a less risky investment.

Next Steps: There are key fundamentals of FreightCar America 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 FreightCar America, take a look at FreightCar America's company page on Simply Wall St. We've also compiled a list of important factors you should further research:

Valuation: What is FreightCar America 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 FreightCar America 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 FreightCar America’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.

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

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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FreightCar America, Inc.’s (NASDAQ:RAIL) Path To Profitability

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