Yahoo Finance BrainChip Holdings Limited’s (ASX:BRN) Path To Profitability
BrainChip Holdings Limited’s (ASX:BRN): BrainChip Holdings Limited provides software and hardware solutions for artificial intelligence and machine learning applications in North America and Europe. The AU$108.25m market-cap company announced a latest loss of -AU$13.80m on 31 December 2017 for its most recent financial year result. The most pressing concern for investors is BRN’s path to profitability – when will it breakeven? In this article, I will touch on the expectations for BRN’s growth and when analysts expect the company to become profitable.
Check out our latest analysis for BrainChip Holdings
BRN is bordering on breakeven, according to Software analysts. They expect the company to post a final loss in 2018, before turning a profit of AU$6.70m in 2019. BRN is therefore projected to breakeven around a couple of months from now! How fast will BRN have to grow each year in order to reach the breakeven point by 2019? Working backwards from analyst estimates, it turns out that they expect the company to grow 56.10% 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.
Given this is a high-level overview, I won’t go into details of BRN’s upcoming projects, however, keep in mind that generally 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. BRN currently has no debt on its balance sheet, which is quite unusual for a cash-burning loss-making, growth company, which usually has a high level of debt relative to its equity. This means that BRN has been operating purely on its equity investment and has no debt burden. This aspect reduces the risk around investing in the loss-making company.
Next Steps:
This article is not intended to be a comprehensive analysis on BRN, so if you are interested in understanding the company at a deeper level, take a look at BRN’s company page on Simply Wall St. I’ve also put together a list of essential aspects you should look at:
Valuation: What is BRN 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 BRN is currently mispriced by the market.
Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on BrainChip Holdings’s board and the CEO’s back ground.
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.
To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned.
