Baylin Technologies Inc.'s (TSE:BYL): Baylin Technologies Inc., through its subsidiaries, engages in the research, designs, development, manufacture, and sale of a range of passive and active radio frequency (RF) and terrestrial microwave products in the North American and Asia. On 31 December 2019, the CA$43m market-cap posted a loss of -CA$19.6m for its most recent financial year. The most pressing concern for investors is BYL’s path to profitability – when will it breakeven? I’ve put together a brief outline of industry analyst expectations for BYL, its year of breakeven and its implied growth rate.
BYL is bordering on breakeven, according to the 4 Electronic analysts. They anticipate the company to incur a final loss in 2020, before generating positive profits of CA$2.8m in 2021. BYL is therefore projected to breakeven around a couple of months from now! What rate will BYL have to grow year-on-year in order to breakeven on this date? Using a line of best fit, I calculated an average annual growth rate of 137%, which is extremely buoyant. 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 BYL’s upcoming projects, but, keep in mind that generally a high forecast growth rate is not unusual for a company that is currently undergoing an investment period.
One thing I would like to bring into light with BYL is its relatively high level of debt. Typically, debt shouldn’t exceed 40% of your equity, which in BYL’s case is 83%. A higher level of debt requires more stringent capital management which increases the risk around investing in the loss-making company.
This article is not intended to be a comprehensive analysis on BYL, so if you are interested in understanding the company at a deeper level, take a look at BYL’s company page on Simply Wall St. I’ve also put together a list of essential aspects you should further examine:
- Historical Track Record: What has BYL'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 Baylin Technologies’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.
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