U.S. Markets closed

Market Sentiment Around Loss-Making Nearmap Ltd (ASX:NEA)

Thomas Auclair

Nearmap Ltd’s (ASX:NEA): Nearmap Ltd provides online aerial photomapping services in Australia and the United States. The company’s loss has recently broadened since it announced a -AU$5.30m loss in the full financial year, compared to the latest trailing-twelve-month loss of -AU$8.85m, moving it further away from breakeven. Many investors are wondering the rate at which NEA will turn a profit, with the big question being “when will the company breakeven?” Below I will provide a high-level summary of the industry analysts’ expectations for NEA.

Check out our latest analysis for Nearmap

Expectation from Internet analysts is NEA is on the verge of breakeven. They expect the company to post a final loss in 2018, before turning a profit of AU$1.01m in 2019. NEA is therefore projected to breakeven around a couple of months from now! In order to meet this breakeven date, I calculated the rate at which NEA must grow year-on-year. It turns out an average annual growth rate of 113.98% is expected, which is rather optimistic! Should the business grow at a slower rate, it will become profitable at a later date than expected.

ASX:NEA Past Future Earnings June 25th 18

I’m not going to go through company-specific developments for NEA given that this is a high-level summary, though, take into account that generally 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. NEA currently has no debt on its balance sheet, which is quite unusual for a cash-burning loss-making, growth company, which usually has a high level of debt relative to its equity. NEA 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 NEA to cover in one brief article, but the key fundamentals for the company can all be found in one place – NEA’s company page on Simply Wall St. I’ve also compiled a list of important aspects you should look at:

  1. Historical Track Record: What has NEA’s performance been like over the past? Go into more detail in the past track record analysis and take a look at the free visual representations of our analysis for more clarity.
  2. Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Nearmap’s board and the CEO’s back ground.
  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.

To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.

The author is an independent contributor and at the time of publication had no position in the stocks mentioned.