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Envirosuite Limited's (ASX:EVS): Envirosuite Limited develops and sells environmental management technology platform solutions. On 30 June 2019, the AU$116m market-cap posted a loss of -AU$6.0m for its most recent financial year. Many investors are wondering the rate at which EVS will turn a profit, with the big question being “when will the company breakeven?” Below I will provide a high-level summary of the industry analysts’ expectations for EVS.
See our latest analysis for Envirosuite
EVS is bordering on breakeven, according to Software analysts. They anticipate the company to incur a final loss in 2021, before generating positive profits of AU$2.5m in 2022. So, EVS is predicted to breakeven approximately 2 years from now. What rate will EVS have to grow year-on-year in order to breakeven on this date? Using a line of best fit, I calculated an average annual growth rate of 68%, which is rather optimistic! If this rate turns out to be too aggressive, EVS may become profitable much later than analysts predict.
I’m not going to go through company-specific developments for EVS given that this is a high-level summary, but, take into account that typically a high growth rate is not out of the ordinary, particularly when a company is in a period of investment.
Before I wrap up, there’s one aspect worth mentioning. EVS has managed its capital prudently, with debt making up 0.07% of equity. This means that EVS 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 key fundamentals of EVS which are not covered in this article, but I must stress again that this is merely a basic overview. For a more comprehensive look at EVS, take a look at EVS’s company page on Simply Wall St. I’ve also put together a list of important aspects you should further research:
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Historical Track Record: What has EVS's 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.
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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 Envirosuite’s board and the CEO’s back ground.
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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.
If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned.
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