It has been a really bumpy few years for shareholders in ITM Energy (LSE: ITM). The ITM share price has risen 58% over the previous 5 years. Over one yr although, it has tumbled by 42%.

With upbeat information about revenues contained within the renewable power agency’s preliminary outcomes revealed immediately (15 August), might now be the time for me to begin shopping for ITM shares for my portfolio?

Sturdy progress, however tons nonetheless to do

Income final yr greater than tripled to £16.5m. Nevertheless, the corporate nonetheless managed to lose £27.1m for the yr. That isn’t good for my part however is a big step ahead from the £101.2m loss within the prior yr.

On the yr finish, ITM had internet money of round £230m. That’s equal to roughly 65% of its present market capitalisation, so stripping out the money, the market is assigning a worth of round £120m to the enterprise.

For this yr, ITM emphasised a “sales pipeline that has grown very strongly” and forecasts income of £18m—£22m. It expects to finish the yr with internet money of £160m-£175m.

The enterprise expects destructive adjusted earnings earlier than curiosity, tax, depreciation and amortisation (EBITDA) of £35m-£40m, greater than final yr. I discover EBITDA an unsatisfactory analytical measure because it ignores potential real-world prices. Nonetheless, between the destructive EBITDA forecast and anticipated ongoing money burn, the message is obvious, ITM continues to be closely lossmaking.

ITM has targeted its actions extra sharply over the previous yr and a half. It’s now focused on rising volumes so it might unfold its mounted prices thinner, doubtlessly transferring it nearer to breaking even.

Dangers stay substantial

Gross sales revenues are properly above what they’ve been up to now and look set to stay that manner, or develop. A extra strategically targeted enterprise signifies that these gross sales might present a pathway to profitability due to ITM specializing in its core strengths and managing prices higher than up to now.

The money pile gives a considerable cushion whereas the enterprise tries to scale up and transfer past its lengthy historical past of creating losses.

I believe the path of journey is constructive and the outcomes spotlight a lot of grounds for optimism, from the monetary potential of the present technique to improved gross sales developments.

However ITM has had confirmed promise not only for years however many years. The problem stays to show that potential into monetary actuality.

Whether or not the present ITM share price is a discount or nonetheless a worth entice regardless of its slide over the previous yr, will finally rely upon whether or not the corporate can ship on its medium- and long-term plans.

A number of the indicators are promising. However there stays substantial work to be performed. I see no rush to take a position.

I might not contemplate shopping for ITM shares but within the absence of extra concrete proof that the enterprise may be worthwhile on a sustained foundation. By that time, the ITM share price could be greater than immediately, however I might be rather more comfy with the chance profile.