Loss-Making EngageSmart, Inc. (NYSE:ESMT) Set To Breakeven
We feel now is a pretty good time to analyse EngageSmart, Inc.'s (NYSE:ESMT) business as it appears the company may be on the cusp of a considerable accomplishment. EngageSmart, Inc. provides Software-as-a-Service based customer engagement software and integrated payment solutions. The US$3.4b market-cap company’s loss lessened since it announced a US$9.0m loss in the full financial year, compared to the latest trailing-twelve-month loss of US$7.4m, as it approaches breakeven. Many investors are wondering about the rate at which EngageSmart 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 EngageSmart
Consensus from 10 of the American Software analysts is that EngageSmart is on the verge of breakeven. They anticipate the company to incur a final loss in 2021, before generating positive profits of US$3.8m in 2022. So, the company is predicted to breakeven approximately 12 months from now or less. At what rate will the company have to grow in order to realise the consensus estimates forecasting breakeven in under 12 months? Using a line of best fit, we calculated an average annual growth rate of 91%, which is rather optimistic! If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.
We're not going to go through company-specific developments for EngageSmart given that this is a high-level summary, however, take into account that generally a high forecast growth rate is not unusual for a company that is currently undergoing an investment period.
One thing we’d like to point out is that EngageSmart 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 too many aspects of EngageSmart to cover in one brief article, but the key fundamentals for the company can all be found in one place – EngageSmart's company page on Simply Wall St. We've also compiled a list of important aspects you should further examine:
Valuation: What is EngageSmart 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 EngageSmart is currently mispriced by the market.
Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on EngageSmart’s board and the CEO’s background.
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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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.
