Yahoo Finance When Will Megaport Limited (ASX:MP1) Become Profitable?
Megaport Limited (ASX:MP1) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. Megaport Limited provides elastic interconnection services to the enterprises and service providers in Australia, New Zealand, Hong Kong, Singapore, Japan, North America, and Europe. With the latest financial year loss of US$33m and a trailing-twelve-month loss of US$28m, the AU$653m market-cap company alleviated its loss by moving closer towards its target of breakeven. As path to profitability is the topic on Megaport's investors mind, we've decided to gauge market sentiment. We've put together a brief outline of industry analyst expectations for the company, its year of breakeven and its implied growth rate.
View our latest analysis for Megaport
Consensus from 14 of the Australian IT analysts is that Megaport is on the verge of breakeven. They expect the company to post a final loss in 2024, before turning a profit of US$5.2m in 2025. So, the company is predicted to breakeven approximately 2 years from today. How fast will the company have to grow each year in order to reach the breakeven point by 2025? Working backwards from analyst estimates, it turns out that they expect the company to grow 63% year-on-year, on average, which signals high confidence from analysts. If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.
Underlying developments driving Megaport's growth isn’t the focus of this broad overview, but, keep in mind that by and large a high forecast growth rate is not unusual for a company that is currently undergoing an investment period.
One thing we’d like to point out is that The company has managed its capital judiciously, with debt making up 9.4% of equity. This means that it 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 too many aspects of Megaport to cover in one brief article, but the key fundamentals for the company can all be found in one place – Megaport's company page on Simply Wall St. We've also put together a list of pertinent factors you should further research:
Valuation: What is Megaport 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 Megaport 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 Megaport’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.
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.
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