Kleos Space S.A. (ASX:KSS) Could Be Less Than A Year Away From Profitability

We feel now is a pretty good time to analyse Kleos Space S.A.'s (ASX:KSS) business as it appears the company may be on the cusp of a considerable accomplishment. Kleos Space S.A. engages in the development of the space enabled, activity-based intelligence, and data-as-a-service (DaaS) products in Luxembourg and internationally. The AU$102m market-cap company posted a loss in its most recent financial year of €3.5m and a latest trailing-twelve-month loss of €3.9m leading to an even wider gap between loss and breakeven. The most pressing concern for investors is Kleos Space's path to profitability – when will it breakeven? Below we will provide a high-level summary of the industry analysts’ expectations for the company.

Check out our latest analysis for Kleos Space

According to some industry analysts covering Kleos Space, breakeven is near. They expect the company to post a final loss in 2020, before turning a profit of €971k in 2021. Therefore, the company is expected to breakeven roughly a year from now or less! At what rate will the company have to grow in order to realise the consensus estimates forecasting breakeven in under 12 months? Using a line of best fit, we calculated an average annual growth rate of 108%, 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 Kleos Space's growth isn’t the focus of this broad overview, but, bear in mind that by and large a high forecast growth rate is not unusual for a company that is currently undergoing an investment period.

One thing we would like to bring into light with Kleos Space is its debt-to-equity ratio of over 2x. Generally, the rule of thumb is debt shouldn’t exceed 40% of your equity, and the company has considerably exceeded this. A higher level of debt requires more stringent capital management which increases the risk around investing in the loss-making company.

Next Steps:

There are key fundamentals of Kleos Space which are not covered in this article, but we must stress again that this is merely a basic overview. For a more comprehensive look at Kleos Space, take a look at Kleos Space's company page on Simply Wall St. We've also compiled a list of pertinent aspects you should further examine:

1. Valuation: What is Kleos Space 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 Kleos Space 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 Kleos Space’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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