Schrole Group Ltd (ASX:SCL): Is Breakeven Near?

We feel now is a pretty good time to analyse Schrole Group Ltd's (ASX:SCL) business as it appears the company may be on the cusp of a considerable accomplishment. Schrole Group Ltd engages in the provision of software solutions and training services primarily to the education sector in Australia and internationally. With the latest financial year loss of AU$2.2m and a trailing-twelve-month loss of AU$1.9m, the AU$13m market-cap company alleviated its loss by moving closer towards its target of breakeven. The most pressing concern for investors is Schrole Group's path to profitability – when will it breakeven? We've put together a brief outline of industry analyst expectations for the company, its year of breakeven and its implied growth rate.

Check out our latest analysis for Schrole Group

Schrole Group is bordering on breakeven, according to some Australian Software analysts. They expect the company to post a final loss in 2021, before turning a profit of AU$400k in 2022. The company is therefore projected to breakeven just over a year from now. In order to meet this breakeven date, we calculated the rate at which the company must grow year-on-year. It turns out an average annual growth rate of 107% is expected, which is extremely buoyant. Should the business grow at a slower rate, it will become profitable at a later date than expected.

We're not going to go through company-specific developments for Schrole Group given that this is a high-level summary, however, take into account that typically 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 aspect worth mentioning. Schrole Group currently has no debt on its balance sheet, which is rare for a loss-making growth company, which usually has a high level of 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:

There are key fundamentals of Schrole 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 Schrole Group, take a look at Schrole Group's company page on Simply Wall St. We've also put together a list of key factors you should further examine:

1. Valuation: What is Schrole 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 Schrole 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 Schrole 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.

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.

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