When Can We Expect A Profit From Straker Translations Limited (ASX:STG)?

We feel now is a pretty good time to analyse Straker Translations Limited's (ASX:STG) business as it appears the company may be on the cusp of a considerable accomplishment. Straker Translations Limited engages in the provision of translation services in Asia Pacific, Europe, the Middle East, Africa, and North America. The company’s loss has recently broadened since it announced a NZ$2.5m loss in the full financial year, compared to the latest trailing-twelve-month loss of NZ$4.8m, moving it further away from breakeven. The most pressing concern for investors is Straker Translations' path to profitability – when will it breakeven? 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 Translations

According to the 2 industry analysts covering Straker Translations, the consensus is that breakeven is near. They expect the company to post a final loss in 2022, before turning a profit of NZ$2.1m in 2023. So, the company is predicted to breakeven approximately 2 years from now. 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 96%, which signals high confidence from analysts. If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.

We're not going to go through company-specific developments for Straker Translations given that this is a high-level summary, however, take into account 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 Translations currently 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 Straker Translations, so if you are interested in understanding the company at a deeper level, take a look at Straker Translations' company page on Simply Wall St. We've also compiled a list of important aspects you should further examine:

1. Historical Track Record: What has Straker Translations' performance been like over the past? Go into more detail in the past track record analysis and take a look at the free visual representations of our analysis for more clarity.
2. Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Straker Translations' 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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