Breakeven On The Horizon For Aussie Broadband Limited (ASX:ABB)

With the business potentially at an important milestone, we thought we'd take a closer look at Aussie Broadband Limited's (ASX:ABB) future prospects. Aussie Broadband Limited provides telecommunications services to homes and businesses in Australia. With the latest financial year loss of AU$12m and a trailing-twelve-month loss of AU$21m, the AU$510m market-cap company amplified its loss by moving further away from its breakeven target. Many investors are wondering about the rate at which Aussie Broadband will turn a profit, with the big question being “when will the company breakeven?” Below we will provide a high-level summary of the industry analysts’ expectations for the company.

See our latest analysis for Aussie Broadband

Expectations from some of the Australian Telecom analysts is that Aussie Broadband is on the verge of breakeven. They expect the company to post a final loss in 2021, before turning a profit of AU$19m in 2022. Therefore, the company is expected 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 54% 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 Aussie Broadband given that this is a high-level summary, but, 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.

One thing we’d like to point out is that The company has managed its capital prudently, with debt making up 0.9% 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 Aussie Broadband, so if you are interested in understanding the company at a deeper level, take a look at Aussie Broadband's company page on Simply Wall St. We've also compiled a list of key aspects you should further examine:

1. Valuation: What is Aussie Broadband 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 Aussie Broadband 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 Aussie Broadband’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. 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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