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Sportech PLC (LON:SPO): When Will It Breakeven?

Simply Wall St
·3 min read

We feel now is a pretty good time to analyse Sportech PLC's (LON:SPO) business as it appears the company may be on the cusp of a considerable accomplishment. Sportech PLC, a sports entertainment company, provides technology solutions for gaming companies, sports teams, racetracks, and casinos and lottery clients in the United Kingdom, North America, South America, Europe, and internationally. The company’s loss has recently broadened since it announced a UK£14m loss in the full financial year, compared to the latest trailing-twelve-month loss of UK£23m, moving it further away from breakeven. The most pressing concern for investors is Sportech's path to profitability – when will it breakeven? Below we will provide a high-level summary of the industry analysts’ expectations for the company.

See our latest analysis for Sportech

Sportech is bordering on breakeven, according to some British Hospitality analysts. They anticipate the company to incur a final loss in 2021, before generating positive profits of UK£1.4m in 2022. So, the company is predicted to breakeven approximately 2 years from today. What rate will the company have to grow year-on-year in order to breakeven on this date? Using a line of best fit, we calculated an average annual growth rate of 103%, 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

Underlying developments driving Sportech's growth isn’t the focus of this broad overview, but, take into account 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 Sportech has no debt on its balance sheet, which is quite unusual for a cash-burning loss-making, growth company, which typically has high 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 Sportech to cover in one brief article, but the key fundamentals for the company can all be found in one place – Sportech's company page on Simply Wall St. We've also compiled a list of important aspects you should look at:

  1. Historical Track Record: What has Sportech'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 Sportech'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@simplywallst.com.