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Breakeven On The Horizon For Transense Technologies plc (LON:TRT)

Simply Wall St
·3 min read

With the business potentially at an important milestone, we thought we'd take a closer look at Transense Technologies plc's (LON:TRT) future prospects. Transense Technologies plc develops, manufactures, and sells wireless and battery-less sensor systems using surface acoustic wave technology primarily in the United Kingdom. On 30 June 2020, the UK£8.6m market-cap company posted a loss of UK£1.1m for its most recent financial year. Many investors are wondering about the rate at which Transense Technologies will turn a profit, with the big question being “when will the company breakeven?” Below we will provide a high-level summary of the industry analysts’ expectations for the company.

See our latest analysis for Transense Technologies

Transense Technologies is bordering on breakeven, according to some British Auto Components analysts. They anticipate the company to incur a final loss in 2021, before generating positive profits of UK£400k in 2022. The company is therefore projected to breakeven around 2 years from now. In order to meet this breakeven date, we calculated the rate at which the company must grow year-on-year. It turns out an average annual growth rate of 106% is expected, which is extremely buoyant. Should the business grow at a slower rate, it will become profitable at a later date than expected.

earnings-per-share-growth
earnings-per-share-growth

Given this is a high-level overview, we won’t go into details of Transense Technologies' upcoming projects, though, 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.

Before we wrap up, there’s one issue worth mentioning. Transense Technologies currently has a relatively high level of debt. Typically, debt shouldn’t exceed 40% of your equity, which in Transense Technologies' case is 45%. A higher level of debt requires more stringent capital management which increases the risk around investing in the loss-making company.

Next Steps:

There are key fundamentals of Transense Technologies which are not covered in this article, but we must stress again that this is merely a basic overview. For a more comprehensive look at Transense Technologies, take a look at Transense Technologies' company page on Simply Wall St. We've also compiled a list of pertinent factors you should further examine:

  1. Valuation: What is Transense Technologies 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 Transense Technologies 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 Transense Technologies’s board and the CEO’s background.

  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.

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. 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com.