We Might See A Profit From SECOS Group Limited (ASX:SES) Soon

We feel now is a pretty good time to analyse SECOS Group Limited's (ASX:SES) business as it appears the company may be on the cusp of a considerable accomplishment. SECOS Group Limited manufactures and distributes sustainable packaging materials in Oceanic, Asia, Americas, Europe, and Africa. The AU$147m market-cap company posted a loss in its most recent financial year of AU$1.2m and a latest trailing-twelve-month loss of AU$19k shrinking the gap between loss and breakeven. Many investors are wondering about the rate at which SECOS Group will turn a profit, with the big question being “when will the company breakeven?” In this article, we will touch on the expectations for the company's growth and when analysts expect it to become profitable.

View our latest analysis for SECOS Group

Consensus from 2 of the Australian Chemicals analysts is that SECOS Group is on the verge of breakeven. They anticipate the company to incur a final loss in 2020, before generating positive profits of AU$1.0m in 2021. So, the company is predicted to breakeven approximately a year from now or less! We calculated the rate at which the company must grow to meet the consensus forecasts predicting breakeven within 12 months. It turns out an average annual growth rate of 95% 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 SECOS Group's growth isn’t the focus of this broad overview, but, bear in mind that typically a high forecast growth rate is not unusual for a company that is currently undergoing an investment period.

One thing we’d like to point out is that The company has managed its capital prudently, with debt making up 0.07% of equity. This means that it 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:

This article is not intended to be a comprehensive analysis on SECOS Group, so if you are interested in understanding the company at a deeper level, take a look at SECOS Group's company page on Simply Wall St. We've also compiled a list of key aspects you should look at:

1. Valuation: What is SECOS Group 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 SECOS Group 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 SECOS Group’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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