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Rekor Systems, Inc.'s (NASDAQ:REKR) Shift From Loss To Profit

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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 Rekor Systems, Inc.'s (NASDAQ:REKR) future prospects. Rekor Systems, Inc., through its subsidiaries, provides vehicle identification and management systems based on artificial intelligence in the United States, Canada, and internationally. The US$957m market-cap company announced a latest loss of US$15m on 31 December 2020 for its most recent financial year result. Many investors are wondering about the rate at which Rekor Systems 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 Rekor Systems

According to the 3 industry analysts covering Rekor Systems, the consensus is that breakeven is near. They anticipate the company to incur a final loss in 2021, before generating positive profits of US$4.5m in 2022. The company is therefore projected to breakeven just over a year 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 94% 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

We're not going to go through company-specific developments for Rekor Systems given that this is a high-level summary, 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 The company has managed its capital judiciously, with debt making up 6.2% of equity. This means that it has predominantly funded its operations from equity capital, and its low debt obligation reduces the risk around investing in the loss-making company.

Next Steps:

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

  1. Historical Track Record: What has Rekor Systems' 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 Rekor Systems' 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.