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With the business potentially at an important milestone, we thought we'd take a closer look at Structural Monitoring Systems Plc's (ASX:SMN) future prospects. Structural Monitoring Systems Plc, together with its subsidiaries, designs, develops, manufactures, and sells structural health monitoring systems for the aviation industry in Australia, Canada, and internationally. The AU$77m market-cap company announced a latest loss of AU$1.0m on 30 June 2024 for its most recent financial year result. Many investors are wondering about the rate at which Structural Monitoring Systems will turn a profit, with the big question being “when will the company breakeven?” Below we will provide a high-level summary of the industry analysts’ expectations for the company.
Check out our latest analysis for Structural Monitoring Systems
According to some industry analysts covering Structural Monitoring Systems, breakeven is near. They expect the company to post a final loss in 2024, before turning a profit of AU$3.8m in 2025. Therefore, the company is expected to breakeven roughly 12 months from now or less. We calculated the rate at which the company must grow to meet the consensus forecasts predicting breakeven within 12 months. It turns out an average annual growth rate of 56% is expected, which is extremely buoyant. 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 Structural Monitoring Systems' upcoming projects, however, bear 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.
Before we wrap up, there’s one issue worth mentioning. Structural Monitoring Systems currently has a relatively high level of debt. Typically, debt shouldn’t exceed 40% of your equity, which in Structural Monitoring Systems' case is 43%. 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 Structural Monitoring Systems to cover in one brief article, but the key fundamentals for the company can all be found in one place – Structural Monitoring Systems' company page on Simply Wall St. We've also compiled a list of relevant aspects you should further examine:
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Valuation: What is Structural Monitoring Systems 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 Structural Monitoring Systems 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 Structural Monitoring Systems’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.