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Kooth plc's (LON:KOO) Shift From Loss To Profit

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·3 min read
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We feel now is a pretty good time to analyse Kooth plc's (LON:KOO) business as it appears the company may be on the cusp of a considerable accomplishment. Kooth plc, together with its subsidiaries, provides digital mental health services to children, young people, and adults in the United Kingdom. The UK£65m market-cap company announced a latest loss of UK£310k on 31 December 2021 for its most recent financial year result. As path to profitability is the topic on Kooth'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.

Check out our latest analysis for Kooth

Consensus from 3 of the British Healthcare analysts is that Kooth is on the verge of breakeven. They anticipate the company to incur a final loss in 2023, before generating positive profits of UK£50k in 2024. So, the company is predicted to breakeven approximately 2 years from today. How fast will the company have to grow each year in order to reach the breakeven point by 2024? Working backwards from analyst estimates, it turns out that they expect the company to grow 7.3% year-on-year, on average, which is fair. If this rate turns out to be too low, the company may become profitable faster than analysts expect.

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

Underlying developments driving Kooth's growth isn’t the focus of this broad overview, however, bear in mind that typically a low or volatile growth rate in the near future is not unusual, especially if the company is currently in an investment period.

One thing we’d like to point out is that Kooth has no debt on its balance sheet, which is quite unusual for a cash-burning growth company, which typically has high debt relative to its equity. The company 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:

There are key fundamentals of Kooth 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 Kooth, take a look at Kooth's company page on Simply Wall St. We've also put together a list of pertinent aspects you should further examine:

  1. Valuation: What is Kooth 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 Kooth 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 Kooth’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.