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Nearmap Ltd's (ASX:NEA) Profit Outlook

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·3 min read
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With the business potentially at an important milestone, we thought we'd take a closer look at Nearmap Ltd's (ASX:NEA) future prospects. Nearmap Ltd provides online aerial photomaps in Australia, New Zealand, and North America. The AU$839m market-cap company posted a loss in its most recent financial year of AU$37m and a latest trailing-twelve-month loss of AU$27m shrinking the gap between loss and breakeven. Many investors are wondering about the rate at which Nearmap will turn a profit, with the big question being “when will the company breakeven?” In this article, we will touch on the expectations for the company's growth and when analysts expect it to become profitable.

Check out our latest analysis for Nearmap

Consensus from 6 of the Australian Software analysts is that Nearmap is on the verge of breakeven. They anticipate the company to incur a final loss in 2023, before generating positive profits of AU$32m in 2024. Therefore, the company is expected to breakeven roughly 3 years from now. How fast will the company have to grow each year in order to reach the breakeven point by 2024? Working backwards from analyst estimates, it turns out that they expect the company to grow 61% year-on-year, on average, which is extremely buoyant. If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.

earnings-per-share-growth
earnings-per-share-growth

Given this is a high-level overview, we won’t go into details of Nearmap's upcoming projects, however, keep in mind that generally a high forecast growth rate is not unusual for a company that is currently undergoing an investment period.

One thing we’d like to point out is that Nearmap 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. The company 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 Nearmap to cover in one brief article, but the key fundamentals for the company can all be found in one place – Nearmap's company page on Simply Wall St. We've also compiled a list of key factors you should further research:

  1. Valuation: What is Nearmap 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 Nearmap is currently mispriced by the market.

  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 background.

  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.

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.