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Breakeven On The Horizon For Eagle Eye Solutions Group plc (LON:EYE)

Simply Wall St

Eagle Eye Solutions Group plc's (LON:EYE): Eagle Eye Solutions Group plc engages in the validation and redemption of digital promotions in real-time for grocery, retail, and hospitality industries in the United Kingdom, rest of Europe, North America, and the Asia Pacific. On 30 June 2019, the UK£40m market-cap posted a loss of -UK£2.4m for its most recent financial year. As path to profitability is the topic on EYE’s investors mind, I’ve decided to gauge market sentiment. I’ve put together a brief outline of industry analyst expectations for EYE, its year of breakeven and its implied growth rate.

See our latest analysis for Eagle Eye Solutions Group

According to the 2 industry analysts covering EYE, the consensus is breakeven is near. They anticipate the company to incur a final loss in 2021, before generating positive profits of UK£827k in 2022. EYE is therefore projected to breakeven around 3 years from now. How fast will EYE have to grow each year in order to reach the breakeven point by 2022? Working backwards from analyst estimates, it turns out that they expect the company to grow 88% year-on-year, on average, which is rather optimistic! If this rate turns out to be too aggressive, EYE may become profitable much later than analysts predict.

AIM:EYE Past and Future Earnings, October 31st 2019

Given this is a high-level overview, I won’t go into details of EYE’s upcoming projects, however, take into account that by and large 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 EYE is its relatively high level of debt. Typically, debt shouldn’t exceed 40% of your equity, which in EYE’s case is 60%. Note that a higher debt obligation increases the risk in investing in the loss-making company.

Next Steps:

There are key fundamentals of EYE which are not covered in this article, but I must stress again that this is merely a basic overview. For a more comprehensive look at EYE, take a look at EYE’s company page on Simply Wall St. I’ve also put together a list of essential aspects you should further research:

  1. Valuation: What is EYE 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 EYE 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 Eagle Eye Solutions Group’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.

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 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. Thank you for reading.