Tyro Payments Limited (ASX:TYR) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. Tyro Payments Limited provides payment solutions to merchants and business banking products to businesses in Australia. The AU$2.1b market-cap company announced a latest loss of AU$38m on 30 June 2020 for its most recent financial year result. Many investors are wondering about the rate at which Tyro Payments will turn a profit, with the big question being “when will the company breakeven?” In this article, we will touch on the expectations for the company's growth and when analysts expect it to become profitable.
According to the 4 industry analysts covering Tyro Payments, the consensus is that breakeven is near. They expect the company to post a final loss in 2021, before turning a profit of AU$2.4m in 2022. Therefore, the company is expected to breakeven roughly 2 years from today. How fast will the company have to grow each year in order to reach the breakeven point by 2022? Working backwards from analyst estimates, it turns out that they expect the company to grow 68% year-on-year, on average, which is rather optimistic! Should the business grow at a slower rate, it will become profitable at a later date than expected.
Given this is a high-level overview, we won’t go into details of Tyro Payments' upcoming projects, however, keep in mind 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 aspect worth mentioning. Tyro Payments currently has no debt on its balance sheet, which is quite unusual for a cash-burning loss-making, growth company, which usually has a high level of debt relative to its equity. This means that the company 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 key fundamentals of Tyro Payments 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 Tyro Payments, take a look at Tyro Payments' company page on Simply Wall St. We've also compiled a list of important aspects you should look at:
- Valuation: What is Tyro Payments 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 Tyro Payments 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 Tyro Payments’s board and the CEO’s background.
- 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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