Shekel Brainweigh Ltd. (ASX:SBW) Is Expected To Breakeven In The Near Future

Shekel Brainweigh Ltd. (ASX:SBW) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. Shekel Brainweigh Ltd., together with its subsidiaries, operates as a digital weighing technology company worldwide. The AU$23m market-cap company announced a latest loss of US$4.4m on 31 December 2020 for its most recent financial year result. Many investors are wondering about the rate at which Shekel Brainweigh will turn a profit, with the big question being “when will the company breakeven?” Below we will provide a high-level summary of the industry analysts’ expectations for the company.

View our latest analysis for Shekel Brainweigh

According to some industry analysts covering Shekel Brainweigh, breakeven is near. They anticipate the company to incur a final loss in 2021, before generating positive profits of US$1.3m in 2022. Therefore, the company is expected to breakeven just over a year 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 148%, which is rather optimistic! If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.

Underlying developments driving Shekel Brainweigh's growth isn’t the focus of this broad overview, though, bear in mind that by and large 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 issue worth mentioning. Shekel Brainweigh currently has a relatively high level of debt. Typically, debt shouldn’t exceed 40% of your equity, which in Shekel Brainweigh's case is 75%. A higher level of debt requires more stringent capital management which increases the risk around investing in the loss-making company.

Next Steps:

This article is not intended to be a comprehensive analysis on Shekel Brainweigh, so if you are interested in understanding the company at a deeper level, take a look at Shekel Brainweigh's company page on Simply Wall St. We've also put together a list of pertinent factors you should further research:

1. Valuation: What is Shekel Brainweigh 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 Shekel Brainweigh 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 Shekel Brainweigh’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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