Alithya Group Inc. (TSE:ALYA) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. Alithya Group Inc. provides strategy and digital technology services in Canada, the United States, and Europe. The company’s loss has recently broadened since it announced a CA$30m loss in the full financial year, compared to the latest trailing-twelve-month loss of CA$33m, moving it further away from breakeven. The most pressing concern for investors is Alithya Group's path to profitability – when will it breakeven? In this article, we will touch on the expectations for the company's growth and when analysts expect it to become profitable.
See our latest analysis for Alithya Group
Consensus from 6 of the Canadian IT analysts is that Alithya Group is on the verge of breakeven. They anticipate the company to incur a final loss in 2024, before generating positive profits of CA$6.9m in 2025. Therefore, the company is expected to breakeven roughly 2 years from today. 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 125% year-on-year, on average, which is rather optimistic! Should the business grow at a slower rate, it will become profitable at a later date than expected.
Underlying developments driving Alithya Group's growth isn’t the focus of this broad overview, though, keep in mind that typically 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. Alithya Group currently has a relatively high level of debt. Typically, debt shouldn’t exceed 40% of your equity, which in Alithya Group's case is 70%. 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 too many aspects of Alithya Group to cover in one brief article, but the key fundamentals for the company can all be found in one place – Alithya Group's company page on Simply Wall St. We've also put together a list of key 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.