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Breakeven On The Horizon For Boingo Wireless, Inc. (NASDAQ:WIFI)

Simply Wall St

Boingo Wireless, Inc.'s (NASDAQ:WIFI): Boingo Wireless, Inc., together with its subsidiaries, provides wireless connectivity solutions for smartphones, tablets, laptops, wearables, and other wireless-enabled consumer devices worldwide. The company’s loss has recently broadened since it announced a -US$1.2m loss in the full financial year, compared to the latest trailing-twelve-month loss of -US$4.7m, moving it further away from breakeven. The most pressing concern for investors is WIFI’s path to profitability – when will it breakeven? In this article, I will touch on the expectations for WIFI’s growth and when analysts expect the company to become profitable.

See our latest analysis for Boingo Wireless

According to the 9 industry analysts covering WIFI, the consensus is breakeven is near. They anticipate the company to incur a final loss in 2020, before generating positive profits of US$36k in 2021. WIFI is therefore projected to breakeven around 2 years from today. How fast will WIFI have to grow each year in order to reach the breakeven point by 2021? Working backwards from analyst estimates, it turns out that they expect the company to grow 65% year-on-year, on average, which signals high confidence from analysts. If this rate turns out to be too aggressive, WIFI may become profitable much later than analysts predict.

NasdaqGS:WIFI Past and Future Earnings, December 24th 2019

Given this is a high-level overview, I won’t go into details of WIFI’s upcoming projects, but, bear in mind that generally a high forecast growth rate is not unusual for a company that is currently undergoing an investment period.

Before I wrap up, there’s one issue worth mentioning. WIFI currently has a debt-to-equity ratio of 170%. Generally, the rule of thumb is debt shouldn’t exceed 40% of your equity, which in WIFI’s case, it has significantly overshot. A higher level of debt requires more stringent capital management which increases the risk in investing in the loss-making company.

Next Steps:

There are too many aspects of WIFI to cover in one brief article, but the key fundamentals for the company can all be found in one place – WIFI’s company page on Simply Wall St. I’ve also put together a list of relevant factors you should look at:

  1. Valuation: What is WIFI 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 WIFI is currently mispriced by the market.
  2. Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Boingo Wireless’s board and the CEO’s back ground.
  3. 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.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.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.

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. Thank you for reading.