Loss-Making S4 Capital plc (LON:SFOR) Expected To Breakeven In The Medium-Term
S4 Capital plc (LON:SFOR) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. S4 Capital plc, together with its subsidiaries, operates as a digital advertising and marketing services company in the Americas, Europe, the Middle East, Africa, and the Asia Pacific. With the latest financial year loss of UK£160m and a trailing-twelve-month loss of UK£97m, the UK£315m market-cap company alleviated its loss by moving closer towards its target of breakeven. Many investors are wondering about the rate at which S4 Capital will turn a profit, with the big question being “when will the company breakeven?” 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 S4 Capital
According to the 6 industry analysts covering S4 Capital, the consensus is that breakeven is near. They expect the company to post a final loss in 2023, before turning a profit of UK£9.7m in 2024. The company is therefore projected to breakeven just over a year from now. In order to meet this breakeven date, we calculated the rate at which the company must grow year-on-year. It turns out an average annual growth rate of 112% is expected, which is extremely buoyant. 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 S4 Capital given that this is a high-level summary, though, take into account that generally a high growth rate is not out of the ordinary, particularly when a company is in a period of investment.
Before we wrap up, there’s one aspect worth mentioning. The company has managed its capital judiciously, with debt making up 38% of equity. This means that it has predominantly funded its operations from equity capital, and its low debt obligation reduces the risk around investing in the loss-making company.
Next Steps:
There are key fundamentals of S4 Capital 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 S4 Capital, take a look at S4 Capital's company page on Simply Wall St. We've also compiled a list of pertinent factors you should further research:
Valuation: What is S4 Capital 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 S4 Capital 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 S4 Capital’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.
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.
