Vault Intelligence Limited's (ASX:VLT): Vault Intelligence Limited provides cloud-based and mobile software products, and related services. The AU$45m market-cap company announced a latest loss of -AU$4.6m on 30 June 2019 for its most recent financial year result. Many investors are wondering the rate at which VLT will turn a profit, with the big question being “when will the company breakeven?” I’ve put together a brief outline of industry analyst expectations for VLT, its year of breakeven and its implied growth rate.
Consensus from the 2 Software analysts is VLT is on the verge of breakeven. They expect the company to post a final loss in 2021, before turning a profit of AU$1.5m in 2022. VLT is therefore projected to breakeven around 2 years from today. What rate will VLT 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 65%, which is extremely buoyant. Should the business grow at a slower rate, it will become profitable at a later date than expected.
I’m not going to go through company-specific developments for VLT given that this is a high-level summary, but, take into account that by and large a high forecast growth rate is not unusual for a company that is currently undergoing an investment period.
Before I wrap up, there’s one aspect worth mentioning. VLT has managed its capital judiciously, with debt making up 3.5% of equity. This means that VLT has predominantly funded its operations from equity capital,and its low debt obligation reduces the risk around investing in the loss-making company.
There are key fundamentals of VLT which are not covered in this article, but I must stress again that this is merely a basic overview. For a more comprehensive look at VLT, take a look at VLT’s company page on Simply Wall St. I’ve also compiled a list of pertinent factors you should further examine:
- Valuation: What is VLT 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 VLT 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 Vault Intelligence’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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