Nearmap Ltd (ASX:NEA): Is Breakeven Near?

Nearmap Ltd's (ASX:NEA): Nearmap Ltd provides online aerial photomapping services in Australia, New Zealand, and North America. With the latest financial year loss of -AU$14.9m and a trailing-twelve month of -AU$31.6m, the AU$1.1b market-cap amplifies its loss by moving further away from its breakeven target. As path to profitability is the topic on NEA’s investors mind, I’ve decided to gauge market sentiment. In this article, I will touch on the expectations for NEA’s growth and when analysts expect the company to become profitable.

See our latest analysis for Nearmap

NEA is bordering on breakeven, according to the 6 Software analysts. They anticipate the company to incur a final loss in 2022, before generating positive profits of AU$44m in 2023. So, NEA is predicted to breakeven approximately 3 years from now. In order to meet this breakeven date, I calculated the rate at which NEA must grow year-on-year. It turns out an average annual growth rate of 67% is expected, which signals high confidence from analysts. Should the business grow at a slower rate, it will become profitable at a later date than expected.

Underlying developments driving NEA’s growth isn’t the focus of this broad overview, but, 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 I’d like to point out is that NEA has no debt on its balance sheet, which is rare for a loss-making loss-making, growth company, which usually has a high level of debt relative to its equity. This means that NEA has been operating purely on its equity investment and has no debt burden. This aspect reduces the risk around investing in the loss-making company.

Next Steps:

This article is not intended to be a comprehensive analysis on NEA, so if you are interested in understanding the company at a deeper level, take a look at NEA’s company page on Simply Wall St. I’ve also compiled a list of essential aspects you should further research:

1. Valuation: What is NEA 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 NEA 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 Nearmap’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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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.
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