When Can We Expect A Profit From eServGlobal Limited (ASX:ESV)?
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eServGlobal Limited's (ASX:ESV): eServGlobal Limited provides telecommunications software solutions to mobile and financial service providers in the Middle East, the Asia Pacific, Europe, Africa, and Central and South America. On 31 December 2018, the AU$120m market-cap posted a loss of -AU$19.9m for its most recent financial year. As path to profitability is the topic on ESV’s investors mind, I’ve decided to gauge market sentiment. I’ve put together a brief outline of industry analyst expectations for ESV, its year of breakeven and its implied growth rate.
See our latest analysis for eServGlobal
According to the industry analysts covering ESV, breakeven is near. They expect the company to post a final loss in 2019, before turning a profit of AU$1.8m in 2020. ESV is therefore projected to breakeven around a few months from now. What rate will ESV 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 99%, which is rather optimistic! If this rate turns out to be too aggressive, ESV may become profitable much later than analysts predict.
Given this is a high-level overview, I won’t go into details of ESV’s upcoming projects, however, 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’d like to point out is that ESV has no debt on its balance sheet, which is rare for a loss-making loss-making, growth company, which typically has high debt relative to its equity. ESV currently operates purely off its shareholder funding and has no debt obligation, reducing concerns around repayments and making it a less risky investment.
Next Steps:
This article is not intended to be a comprehensive analysis on ESV, so if you are interested in understanding the company at a deeper level, take a look at ESV’s company page on Simply Wall St. I’ve also compiled a list of important factors you should further research:
Historical Track Record: What has ESV'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 eServGlobal’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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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.
