Loss-Making Catapult Group International Limited (ASX:CAT) Expected To Breakeven In The Medium-Term

Catapult Group International Limited (ASX:CAT) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. Catapult Group International Limited develops and sells wearable tracking and analytics solutions in Australia, Europe, the Middle East, Africa, the Asia Pacific, and the Americas. On 31 March 2023, the AU$290m market-cap company posted a loss of US$31m for its most recent financial year. Many investors are wondering about the rate at which Catapult Group International 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.

See our latest analysis for Catapult Group International

Consensus from 5 of the Australian Electronic analysts is that Catapult Group International is on the verge of breakeven. They expect the company to post a final loss in 2025, before turning a profit of US$1.5m in 2026. The company is therefore projected to breakeven around 3 years 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 70%, which is rather optimistic! If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.

Given this is a high-level overview, we won’t go into details of Catapult Group International's upcoming projects, however, take into account that by and large a high forecast growth rate is not unusual for a company that is currently undergoing an investment period.

One thing we’d like to point out is that The company has managed its capital prudently, with debt making up 18% of equity. This means that it has predominantly funded its operations from equity capital, and its low debt obligation reduces the risk around investing in the loss-making company.

Next Steps:

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

1. Valuation: What is Catapult Group International 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 Catapult Group International 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 Catapult Group International’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.