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Opsens Inc. (TSE:OPS): Is Breakeven Near?

Simply Wall St

Opsens Inc.'s (TSE:OPS): Opsens Inc. develops, manufactures, installs, and sells fiber optic sensors for interventional cardiology, fractional flow reserve (FFR), oil and gas, and industrial applications. The CA$72m market-cap company announced a latest loss of -CA$2.0m on 31 August 2019 for its most recent financial year result. Many investors are wondering the rate at which OPS 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 OPS, its year of breakeven and its implied growth rate.

See our latest analysis for Opsens

According to the 3 industry analysts covering OPS, the consensus is breakeven is near. They expect the company to post a final loss in 2020, before turning a profit of CA$1.1m in 2021. Therefore, OPS is expected to breakeven roughly 2 years from now. What rate will OPS 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 85%, which is extremely buoyant. If this rate turns out to be too aggressive, OPS may become profitable much later than analysts predict.

TSX:OPS Past and Future Earnings, December 5th 2019

Underlying developments driving OPS’s growth isn’t the focus of this broad overview, however, take into account that generally a high growth rate is not out of the ordinary, particularly when a company is in a period of investment.

Before I wrap up, there’s one issue worth mentioning. OPS currently has a relatively high level of debt. Generally, the rule of thumb is debt shouldn’t exceed 40% of your equity, which in OPS’s case is 43%. A higher level of debt requires more stringent capital management which increases the risk in investing in the loss-making company.

Next Steps:

This article is not intended to be a comprehensive analysis on OPS, so if you are interested in understanding the company at a deeper level, take a look at OPS’s company page on Simply Wall St. I’ve also put together a list of pertinent aspects you should further examine:

  1. Historical Track Record: What has OPS'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 Opsens’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.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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. Simply Wall St has no position in the stocks mentioned.

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