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When Will Catapult Group International Limited (ASX:CAT) Breakeven?

Simply Wall St

Catapult Group International Limited's (ASX:CAT): Catapult Group International Limited develops and sells wearable tracking solutions and analytics. The AU$369m market-cap company announced a latest loss of -AU$12.6m on 30 June 2019 for its most recent financial year result. The most pressing concern for investors is CAT’s path to profitability – when will it breakeven? Below I will provide a high-level summary of the industry analysts’ expectations for CAT.

See our latest analysis for Catapult Group International

CAT is bordering on breakeven, according to the 5 Electronic analysts. They expect the company to post a final loss in 2020, before turning a profit of AU$5.2m in 2021. CAT is therefore projected to breakeven around a couple of months from now! In order to meet this breakeven date, I calculated the rate at which CAT must grow year-on-year. It turns out an average annual growth rate of 96% is expected, which signals high confidence from analysts. Should the business grow at a slower rate, it will become profitable at a later date than expected.

ASX:CAT Past and Future Earnings, February 11th 2020

Given this is a high-level overview, I won’t go into details of CAT’s upcoming projects, but, keep in mind that typically 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 aspect worth mentioning. CAT currently has no debt on its balance sheet, which is quite unusual for a cash-burning loss-making, growth company, which typically has high debt relative to its equity. This means that CAT has been operating purely on its equity investment and has no debt burden. This aspect reduces the risk around investing in the loss-making company.

Next Steps:

This article is not intended to be a comprehensive analysis on CAT, so if you are interested in understanding the company at a deeper level, take a look at CAT’s company page on Simply Wall St. I’ve also compiled a list of relevant aspects you should further examine:

  1. Valuation: What is CAT 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 CAT 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 Catapult Group International’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.

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