Gaming Realms plc’s (LON:GMR) Shift From Loss To Profit

Gaming Realms plc’s (LON:GMR): Gaming Realms plc develops, publishes, and licenses mobile gaming content in the United Kingdom, the United States, and internationally. The UK£24m market-cap posted a loss in its most recent financial year of -UK£5.6m and a latest trailing-twelve-month loss of -UK£5.0m shrinking the gap between loss and breakeven. As path to profitability is the topic on GMR’s investors mind, I’ve decided to gauge market sentiment. In this article, I will touch on the expectations for GMR’s growth and when analysts expect the company to become profitable.

Check out our latest analysis for Gaming Realms

According to the industry analysts covering GMR, breakeven is near. They expect the company to post a final loss in 2020, before turning a profit of UK£1.3m in 2021. GMR is therefore projected to breakeven around 2 years from today. What rate will GMR 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 86%, which is rather optimistic! If this rate turns out to be too aggressive, GMR may become profitable much later than analysts predict.

AIM:GMR Past and Future Earnings, November 13th 2019
AIM:GMR Past and Future Earnings, November 13th 2019

Given this is a high-level overview, I won’t go into details of GMR’s upcoming projects, though, 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 aspect worth mentioning. GMR has managed its capital prudently, with debt making up 26% of equity. This means that GMR 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:

There are too many aspects of GMR to cover in one brief article, but the key fundamentals for the company can all be found in one place – GMR’s company page on Simply Wall St. I’ve also put together a list of key factors you should further examine:

  1. Historical Track Record: What has GMR’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 Gaming Realms’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.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

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. Thank you for reading.