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With the business potentially at an important milestone, we thought we'd take a closer look at Alithya Group Inc.'s (TSE:ALYA) future prospects. Alithya Group Inc. provides strategy and digital technology services in Canada, the United States, and Europe. With the latest financial year loss of CA$17m and a trailing-twelve-month loss of CA$4.5m, the CA$194m market-cap company alleviated its loss by moving closer towards its target of breakeven. The most pressing concern for investors is Alithya Group's 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.
Consensus from 6 of the Canadian IT analysts is that Alithya Group is on the verge of breakeven. They expect the company to post a final loss in 2025, before turning a profit of CA$6.4m in 2026. Therefore, the company is expected to breakeven just over a year from now. 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 86% is expected, which is rather optimistic! If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.
Given this is a high-level overview, we won’t go into details of Alithya Group's upcoming projects, though, keep in mind that by and large a high growth rate is not out of the ordinary, particularly when a company is in a period of investment.
Check out our latest analysis for Alithya Group
Before we wrap up, there’s one issue worth mentioning. Alithya Group currently has a relatively high level of debt. Generally, the rule of thumb is debt shouldn’t exceed 40% of your equity, which in Alithya Group's case is 69%. A higher level of debt requires more stringent capital management which increases the risk around investing in the loss-making company.
Next Steps:
There are key fundamentals of Alithya Group 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 Alithya Group, take a look at Alithya Group's company page on Simply Wall St. We've also put together a list of pertinent factors you should further examine:
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Valuation: What is Alithya Group 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 Alithya Group is currently mispriced by the market.
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Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Alithya Group’s board and the CEO’s background.
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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.