Breakeven On The Horizon For SECOS Group Limited (ASX:SES)

SECOS Group Limited's (ASX:SES): SECOS Group Limited manufactures and distributes sustainable packaging materials worldwide. The AU$56m market-cap company’s loss lessens since it announced a AU$4.2m loss in the full financial year, compared to the latest trailing-twelve-month loss of AU$2.3m, as it approaches breakeven. Many investors are wondering the rate at which SES will turn a profit, with the big question being “when will the company breakeven?” In this article, I will touch on the expectations for SES’s growth and when analysts expect the company to become profitable.

Check out our latest analysis for SECOS Group

According to the industry analysts covering SES, breakeven is near. They anticipate the company to incur a final loss in 2020, before generating positive profits of AU$200k in 2021. So, SES is predicted to breakeven approximately a couple of months from now! How fast will SES have to grow each year in order to reach the breakeven point by 2021? Working backwards from analyst estimates, it turns out that they expect the company to grow 111% year-on-year, on average, which is extremely buoyant. Should the business grow at a slower rate, it will become profitable at a later date than expected.

Given this is a high-level overview, I won’t go into details of SES’s upcoming projects, but, keep in mind that typically 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 aspect worth mentioning. SES has managed its capital prudently, with debt making up 8.6% of equity. This means that SES 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 SES, so if you are interested in understanding the company at a deeper level, take a look at SES’s company page on Simply Wall St. I’ve also compiled a list of relevant factors you should look at:

1. Valuation: What is SES 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 SES 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 SECOS Group’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.

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