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Analysts Expect Breakeven For Novatti Group Limited (ASX:NOV) Before Long

We feel now is a pretty good time to analyse Novatti Group Limited's (ASX:NOV) business as it appears the company may be on the cusp of a considerable accomplishment. Novatti Group Limited operates as a fintech company worldwide. On 30 June 2023, the AU$31m market-cap company posted a loss of AU$26m for its most recent financial year. The most pressing concern for investors is Novatti Group's path to profitability – when will it breakeven? Below we will provide a high-level summary of the industry analysts’ expectations for the company.

View our latest analysis for Novatti Group

Novatti Group is bordering on breakeven, according to some Australian Software analysts. They expect the company to post a final loss in 2024, before turning a profit of AU$1.2m in 2025. Therefore, the company is expected to breakeven roughly 2 years from now. What rate will the company have to grow year-on-year in order to breakeven on this date? Using a line of best fit, we calculated an average annual growth rate of 100%, which is rather optimistic! Should the business grow at a slower rate, it will become profitable at a later date than expected.

earnings-per-share-growth
earnings-per-share-growth

We're not going to go through company-specific developments for Novatti Group given that this is a high-level summary, but, take into account that typically a high forecast growth rate is not unusual for a company that is currently undergoing an investment period.

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One thing we would like to bring into light with Novatti Group is its relatively high level of debt. Typically, debt shouldn’t exceed 40% of your equity, which in Novatti Group's case is 68%. Note that a higher debt obligation increases the risk in investing in the loss-making company.

Next Steps:

This article is not intended to be a comprehensive analysis on Novatti Group, so if you are interested in understanding the company at a deeper level, take a look at Novatti Group's company page on Simply Wall St. We've also compiled a list of pertinent factors you should further examine:

  1. Valuation: What is Novatti 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 Novatti Group is currently mispriced by the market.

  2. Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Novatti Group’s board and the CEO’s background.

  3. 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.