EHang Holdings Limited's (NASDAQ:EH) Shift From Loss To Profit

We feel now is a pretty good time to analyse EHang Holdings Limited's (NASDAQ:EH) business as it appears the company may be on the cusp of a considerable accomplishment. EHang Holdings Limited operates as an autonomous aerial vehicle (AAV) technology platform company in the People’s Republic of China, East Asia, West Asia, Europe, and internationally. The US$1.2b market-cap company announced a latest loss of CN¥302m on 31 December 2023 for its most recent financial year result. Many investors are wondering about the rate at which EHang Holdings 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.

See our latest analysis for EHang Holdings

According to the 3 industry analysts covering EHang Holdings, the consensus is that breakeven is near. They anticipate the company to incur a final loss in 2024, before generating positive profits of CN¥118m in 2025. The company is therefore projected to breakeven just over a year from now. How fast will the company have to grow each year in order to reach the breakeven point by 2025? Working backwards from analyst estimates, it turns out that they expect the company to grow 98% year-on-year, on average, which signals high confidence from analysts. Should the business grow at a slower rate, it will become profitable at a later date than expected.

earnings-per-share-growth

Underlying developments driving EHang Holdings' growth isn’t the focus of this broad overview, though, keep in mind that typically a high growth rate is not out of the ordinary, particularly when a company is in a period of investment.

One thing we’d like to point out is that The company has managed its capital judiciously, with debt making up 33% of equity. This means that it has predominantly funded its operations from equity capital, and its low debt obligation reduces the risk around investing in the loss-making company.

Next Steps:

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

1. Historical Track Record: What has EHang Holdings' 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 EHang Holdings' 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.