Straker Limited (ASX:STG): Is Breakeven Near?

Straker Limited (ASX:STG) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. Straker Limited, together with its subsidiaries, engages in the provision of language and subscription services in the Asia Pacific, Europe, the Middle East, Africa, and North America. The AU$38m market-cap company announced a latest loss of NZ$2.8m on 31 March 2023 for its most recent financial year result. As path to profitability is the topic on Straker'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.

Check out our latest analysis for Straker

Straker is bordering on breakeven, according to some Australian Commercial Services analysts. They expect the company to post a final loss in 2025, before turning a profit of NZ$200k in 2026. Therefore, the company is expected to breakeven roughly 3 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 71%, 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, we won’t go into details of Straker's upcoming projects, however, keep in mind that generally a high growth rate is not out of the ordinary, particularly when a company is in a period of investment.

Before we wrap up, there’s one aspect worth mentioning. Straker currently has no debt on its balance sheet, which is quite unusual for a cash-burning 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:

There are too many aspects of Straker to cover in one brief article, but the key fundamentals for the company can all be found in one place – Straker's company page on Simply Wall St. We've also compiled a list of pertinent aspects you should look at:

1. Valuation: What is Straker 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 Straker 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 Straker’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. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.