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When Will IQGeo Group plc (LON:IQG) Become Profitable?

·3 min read

With the business potentially at an important milestone, we thought we'd take a closer look at IQGeo Group plc's (LON:IQG) future prospects. IQGeo Group plc develops geospatial software to the telecoms and utility network industries in the United Kingdom, Europe, the United States, Canada, Japan, and internationally. The UK£87m market-cap company announced a latest loss of UK£1.9m on 31 December 2021 for its most recent financial year result. As path to profitability is the topic on IQGeo Group's investors mind, we've decided to gauge market sentiment. We've put together a brief outline of industry analyst expectations for the company, its year of breakeven and its implied growth rate.

See our latest analysis for IQGeo Group

According to some industry analysts covering IQGeo Group, breakeven is near. They anticipate the company to incur a final loss in 2022, before generating positive profits of UK£3.1m in 2023. So, the company is predicted to breakeven just over a year from today. What rate will the company have to grow year-on-year in order to breakeven on this date? Using a line of best fit, we calculated an average annual growth rate of 87%, which signals high confidence from analysts. If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.

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

Given this is a high-level overview, we won’t go into details of IQGeo Group's upcoming projects, however, keep in mind that generally a high growth rate is not out of the ordinary, particularly when a company is in a period of investment.

One thing we’d like to point out is that IQGeo Group has no debt on its balance sheet, which is quite unusual for a cash-burning growth company, which usually has a high level of debt relative to its equity. This means that the company 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:

There are too many aspects of IQGeo Group to cover in one brief article, but the key fundamentals for the company can all be found in one place – IQGeo Group's company page on Simply Wall St. We've also put together a list of key factors you should further examine:

  1. Valuation: What is IQGeo Group 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 IQGeo Group 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 IQGeo Group’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.

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

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.

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