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Afterpay Touch Group Limited's (ASX:APT): Afterpay Touch Group Limited operates as a payments company in Australia. The AU$6.5b market-cap posted a loss in its most recent financial year of -AU$9.0m and a latest trailing-twelve-month loss of -AU$30.3m leading to an even wider gap between loss and breakeven. The most pressing concern for investors is APT’s path to profitability – when will it breakeven? In this article, I will touch on the expectations for APT’s growth and when analysts expect the company to become profitable.
APT is bordering on breakeven, according to the 6 IT analysts. They anticipate the company to incur a final loss in 2019, before generating positive profits of AU$17m in 2020. APT is therefore projected to breakeven around a few months from now. In order to meet this breakeven date, I calculated the rate at which APT must grow year-on-year. It turns out an average annual growth rate of 67% is expected, which signals high confidence from analysts. If this rate turns out to be too aggressive, APT may become profitable much later than analysts predict.
Given this is a high-level overview, I won’t go into details of APT’s upcoming projects, though, take into account 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 issue worth mentioning. APT currently has a relatively high level of debt. Typically, debt shouldn’t exceed 40% of your equity, which in APT’s case is 53%. A higher level of debt requires more stringent capital management which increases the risk around investing in the loss-making company.
There are too many aspects of APT to cover in one brief article, but the key fundamentals for the company can all be found in one place – APT’s company page on Simply Wall St. I’ve also put together a list of relevant aspects you should further research:
- Historical Track Record: What has APT's performance been like over the past? Go into more detail in the past track record analysis and take a look at the free visual representations of our analysis for more clarity.
- Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Afterpay Touch Group’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.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at email@example.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.