Amaero International Ltd's (ASX:3DA) Path To Profitability

With the business potentially at an important milestone, we thought we'd take a closer look at Amaero International Ltd's (ASX:3DA) future prospects. Amaero International Ltd manufactures various large format complex components in metal using laser based additive manufacturing processes. The AU$122m market-cap company announced a latest loss of AU$5.8m on 30 June 2020 for its most recent financial year result. As path to profitability is the topic on Amaero International's investors mind, we've decided to gauge market sentiment. In this article, we will touch on the expectations for the company's growth and when analysts expect it to become profitable.

See our latest analysis for Amaero International

According to some industry analysts covering Amaero International, breakeven is near. They anticipate the company to incur a final loss in 2022, before generating positive profits of AU$12m in 2023. 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 60%, which is rather optimistic! 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, we won’t go into details of Amaero International's upcoming projects, but, take into account that by and large a high growth rate is not out of the ordinary, particularly when a company is in a period of investment.

One thing we’d like to point out is that Amaero International has no debt on its balance sheet, which is rare for a 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:

This article is not intended to be a comprehensive analysis on Amaero International, so if you are interested in understanding the company at a deeper level, take a look at Amaero International's company page on Simply Wall St. We've also put together a list of key factors you should further research:

1. Valuation: What is Amaero International 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 Amaero International 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 Amaero International’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.

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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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