When Can We Expect A Profit From Novatti Group Limited (ASX:NOV)?

Novatti Group Limited (ASX:NOV) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. Novatti Group Limited operates as a fintech company worldwide. On 30 June 2024, the AU$16m market-cap company posted a loss of AU$17m for its most recent financial year. As path to profitability is the topic on Novatti Group's investors mind, we've decided to gauge market sentiment. Below we will provide a high-level summary of the industry analysts’ expectations for the company.

See our latest analysis for Novatti Group

Novatti Group is bordering on breakeven, according to some Australian Software analysts. They anticipate the company to incur a final loss in 2025, before generating positive profits of AU$5.7m in 2026. So, the company is predicted to breakeven just over a year 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 104%, which is extremely buoyant. Should the business grow at a slower rate, it will become profitable at a later date than expected.

Underlying developments driving Novatti Group's growth isn’t the focus of this broad overview, however, take into account that generally a high forecast growth rate is not unusual for a company that is currently undergoing an investment period.

Before we wrap up, there’s one issue worth mentioning. Novatti Group currently has a debt-to-equity ratio of over 2x. Generally, the rule of thumb is debt shouldn’t exceed 40% of your equity, which in this case, the company has significantly overshot. 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 Novatti Group 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 Novatti Group, take a look at Novatti Group's company page on Simply Wall St. We've also compiled a list of pertinent factors you should look at:

1. Valuation: What is Novatti 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 Novatti 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 Novatti 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. 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.