Senetas Corporation Limited (ASX:SEN) Is Expected To Breakeven In The Near Future

With the business potentially at an important milestone, we thought we'd take a closer look at Senetas Corporation Limited's (ASX:SEN) future prospects. Senetas Corporation Limited, together with its subsidiaries, offers network data security solutions to businesses and governments worldwide. With the latest financial year loss of AU$7.3m and a trailing-twelve-month loss of AU$8.1m, the AU$19m market-cap company amplified its loss by moving further away from its breakeven target. As path to profitability is the topic on Senetas' 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 Senetas

Expectations from some of the Australian Communications analysts is that Senetas is on the verge of breakeven. They anticipate the company to incur a final loss in 2024, before generating positive profits of AU$400k in 2025. Therefore, the company is expected to breakeven just over a year from today. How fast will the company have to grow each year in order to reach the breakeven point by 2025? Working backwards from analyst estimates, it turns out that they expect the company to grow 107% year-on-year, on average, which is rather optimistic! If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.

We're not going to go through company-specific developments for Senetas given that this is a high-level summary, though, bear in mind that generally 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 aspect worth mentioning. Senetas currently has no debt on its balance sheet, which is rare for a loss-making growth company, which typically has high 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.

Next Steps:

There are too many aspects of Senetas to cover in one brief article, but the key fundamentals for the company can all be found in one place – Senetas' company page on Simply Wall St. We've also compiled a list of relevant factors you should further examine:

1. Historical Track Record: What has Senetas' performance been like over the past? Go into more detail in the past track record analysis and take a look at the free visual representations of our analysis for more clarity.
2. Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Senetas' 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.