Analysts Are Optimistic We'll See A Profit From Structural Monitoring Systems Plc (ASX:SMN)

Structural Monitoring Systems Plc (ASX:SMN) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. Structural Monitoring Systems Plc, together with its subsidiaries, designs, develops, manufactures, and sells structural health monitoring systems for the aviation industry in Australia, the United Kingdom, rest of Europe, Asia, the Middle East, Australasia, and Africa. On 30 June 2024, the AU$83m market-cap company posted a loss of AU$1.0m for its most recent financial year. The most pressing concern for investors is Structural Monitoring Systems' path to profitability – when will it breakeven? In this article, we will touch on the expectations for the company's growth and when analysts expect it to become profitable.

View our latest analysis for Structural Monitoring Systems

Structural Monitoring Systems is bordering on breakeven, according to some Australian Electronic analysts. They anticipate the company to incur a final loss in 2024, before generating positive profits of AU$3.7m in 2025. The company is therefore projected to breakeven around a year from now or less! At what rate will the company have to grow in order to realise the consensus estimates forecasting breakeven in under 12 months? Using a line of best fit, we calculated an average annual growth rate of 97%, which signals high confidence from analysts. Should the business grow at a slower rate, it will become profitable at a later date than expected.

Underlying developments driving Structural Monitoring Systems' growth isn’t the focus of this broad overview, however, bear in mind 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 would like to bring into light with Structural Monitoring Systems is its relatively high level of debt. Typically, debt shouldn’t exceed 40% of your equity, which in Structural Monitoring Systems' case is 43%. Note that a higher debt obligation increases the risk in investing in the loss-making company.

Next Steps:

This article is not intended to be a comprehensive analysis on Structural Monitoring Systems, so if you are interested in understanding the company at a deeper level, take a look at Structural Monitoring Systems' company page on Simply Wall St. We've also put together a list of important aspects you should further examine:

1. Valuation: What is Structural Monitoring Systems 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 Structural Monitoring Systems 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 Structural Monitoring Systems’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.