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We feel now is a pretty good time to analyse Agilysys, Inc.'s (NASDAQ:AGYS) business as it appears the company may be on the cusp of a considerable accomplishment. Agilysys, Inc., together with its subsidiaries, operates as a developer and marketer of hardware and software products and services to the hospitality industry in North America, Europe, the Asia-Pacific, and India. With the latest financial year loss of US$34m and a trailing-twelve-month loss of US$26m, the US$1.3b market-cap company alleviated its loss by moving closer towards its target of breakeven. As path to profitability is the topic on Agilysys' investors mind, we've decided to gauge market sentiment. Below we will provide a high-level summary of the industry analysts’ expectations for the company.
Consensus from 4 of the American Software analysts is that Agilysys is on the verge of breakeven. They anticipate the company to incur a final loss in 2020, before generating positive profits of US$2.0m in 2021. Therefore, the company is expected to breakeven roughly a year 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 89%, which signals high confidence from analysts. 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 Agilysys given that this is a high-level summary, however, keep in mind 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. Agilysys currently has no debt on its balance sheet, which is quite unusual for a cash-burning growth company, which usually has a high level of debt relative to its equity. This means that the company has been operating purely on its equity investment and has no debt burden. This aspect reduces the risk around investing in the loss-making company.
There are key fundamentals of Agilysys 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 Agilysys, take a look at Agilysys' company page on Simply Wall St. We've also compiled a list of essential factors you should further examine:
Valuation: What is Agilysys 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 Agilysys 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 Agilysys’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.
This article by Simply Wall St is general in nature. 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.
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