Yahoo Finance Market Sentiment Around Loss-Making Webcentral Limited (ASX:WCG)
Webcentral Limited (ASX:WCG) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. Webcentral Limited operates as a licensed telecommunications carrier in Australia and New Zealand. On 30 June 2021, the AU$161m market-cap company posted a loss of AU$4.7m for its most recent financial year. As path to profitability is the topic on Webcentral's investors mind, we've decided to gauge market sentiment. In this article, we will touch on the expectations for the company's growth and when analysts expect it to become profitable.
Check out our latest analysis for Webcentral
Expectations from some of the Australian Telecom analysts is that Webcentral is on the verge of breakeven. They expect the company to post a final loss in 2023, before turning a profit of AU$619k in 2024. Therefore, the company is expected to breakeven roughly 3 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 86%, 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, we won’t go into details of Webcentral's upcoming projects, however, 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. Webcentral currently has a relatively high level of debt. Typically, debt shouldn’t exceed 40% of your equity, which in Webcentral's case is 42%. 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 Webcentral to cover in one brief article, but the key fundamentals for the company can all be found in one place – Webcentral's company page on Simply Wall St. We've also put together a list of essential factors you should further examine:
Valuation: What is Webcentral 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 Webcentral 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 Webcentral’s board and the CEO’s background.
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.
