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When Will Nearmap Ltd (ASX:NEA) Become Profitable?

Erna Eldridge

Nearmap Ltd’s (ASX:NEA): Nearmap Ltd provides online aerial photomapping services in Australia and the United States. With the latest financial year loss of -AU$5.30M and a trailing-twelve month of -AU$8.85M, the AU$352.94M market-cap amplifies its loss by moving further away from its breakeven target. As path to profitability is the topic on NEA’s investors mind, I’ve decided to gauge market sentiment. In this article, I will touch on the expectations for NEA’s growth and when analysts expect the company to become profitable.

Check out our latest analysis for Nearmap

Expectation from analysts is NEA is on the verge of breakeven. They anticipate the company to incur a final loss in 2018, before generating positive profits of AU$1.01M in 2019. So, NEA is predicted to breakeven approximately a few months from now. What rate will NEA 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 113.98%, 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 May 16th 18

Given this is a high-level overview, I won’t go into detail the detail of NEA’s upcoming projects, though, keep in mind that typically a high forecast growth rate is not unusual for a company that is currently undergoing an investment period.

One thing I’d like to point out is that NEA has no debt on its balance sheet, which is rare for a loss-making loss-making, growth company, which typically has high 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 key fundamentals of NEA 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 NEA, take a look at NEA’s company page on Simply Wall St. I’ve also put together a list of important aspects you should further examine:

  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.