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BrainChip Holdings Limited’s (ASX:BRN): BrainChip Holdings Limited provides software and hardware solutions for artificial intelligence and machine learning applications in North America and Europe. The company’s loss has recently broadened since it announced a -US$13.8m loss in the full financial year, compared to the latest trailing-twelve-month loss of -US$16.4m, moving it further away from breakeven. The most pressing concern for investors is BRN’s path to profitability – when will it breakeven? I’ve put together a brief outline of industry analyst expectations for BRN, its year of breakeven and its implied growth rate.
According to the industry analysts covering BRN, breakeven is near. They expect the company to post a final loss in 2018, before turning a profit of US$1.5m in 2019. Therefore, BRN is expected to breakeven roughly a few months from now. How fast will BRN have to grow each year in order to reach the breakeven point by 2019? Working backwards from analyst estimates, it turns out that they expect the company to grow 69% year-on-year, on average, which signals high confidence from analysts. If this rate turns out to be too aggressive, BRN may become profitable much later than analysts predict.
Underlying developments driving BRN’s growth isn’t the focus of this broad overview, though, take into account that generally a high forecast growth rate is not unusual for a company that is currently undergoing an investment period.
One thing I’d like to point out is that BRN has no debt on its balance sheet, which is rare for a loss-making loss-making, growth company, which typically has high debt relative to its equity. This means that BRN has been operating purely on its equity investment and has no debt burden. This aspect reduces the risk around investing in the loss-making company.
There are too many aspects of BRN to cover in one brief article, but the key fundamentals for the company can all be found in one place – BRN’s company page on Simply Wall St. I’ve also compiled a list of relevant aspects you should look at:
- Valuation: What is BRN 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 BRN is currently mispriced by the market.
- Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on BrainChip Holdings’s board and the CEO’s back ground.
- 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.
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at firstname.lastname@example.org.