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When Will PlayAGS, Inc. (NYSE:AGS) Become Profitable?

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Simply Wall St
·3 min read
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With the business potentially at an important milestone, we thought we'd take a closer look at PlayAGS, Inc.'s (NYSE:AGS) future prospects. PlayAGS, Inc. designs and supplies gaming products and services for the gaming industry in the United States and internationally. The US$280m market-cap company announced a latest loss of US$85m on 31 December 2020 for its most recent financial year result. Many investors are wondering about the rate at which PlayAGS will turn a profit, with the big question being “when will the company breakeven?” Below we will provide a high-level summary of the industry analysts’ expectations for the company.

Check out our latest analysis for PlayAGS

According to the 7 industry analysts covering PlayAGS, the consensus is that breakeven is near. They anticipate the company to incur a final loss in 2022, before generating positive profits of US$3.3m in 2023. Therefore, the company is expected to breakeven roughly 2 years from now. In order to meet this breakeven date, we calculated the rate at which the company must grow year-on-year. It turns out an average annual growth rate of 88% is expected, which is rather optimistic! Should the business grow at a slower rate, it will become profitable at a later date than expected.

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

Given this is a high-level overview, we won’t go into details of PlayAGS' upcoming projects, but, bear in mind that by and large a high forecast growth rate is not unusual for a company that is currently undergoing an investment period.

One thing we would like to bring into light with PlayAGS is its debt-to-equity ratio of over 2x. Typically, debt shouldn’t exceed 40% of your equity, and the company has considerably exceeded this. Note that a higher debt obligation increases the risk around investing in the loss-making company.

Next Steps:

This article is not intended to be a comprehensive analysis on PlayAGS, so if you are interested in understanding the company at a deeper level, take a look at PlayAGS' company page on Simply Wall St. We've also put together a list of key factors you should further research:

  1. Valuation: What is PlayAGS 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 PlayAGS 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 PlayAGS’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.