When Will Sky and Space Global Limited (ASX:SAS) Become Profitable?

Sky and Space Global Limited’s (ASX:SAS): Sky and Space Global Limited operates as a nano-satellite technology company. On 30 June 2018, the AU$105m market-cap posted a loss of -AU$8m for its most recent financial year. As path to profitability is the topic on SAS’s investors mind, I’ve decided to gauge market sentiment. In this article, I will touch on the expectations for SAS’s growth and when analysts expect the company to become profitable.

Check out our latest analysis for Sky andce Global

SAS is bordering on breakeven, according to Telecom analysts. They anticipate the company to incur a final loss in 2019, before generating positive profits of AU$24m in 2020. Therefore, SAS is expected to breakeven roughly a few months from now. What rate will SAS have to grow year-on-year in order to breakeven on this date? Using a line of best fit, I calculated an average annual growth rate of 71%, which is extremely buoyant. If this rate turns out to be too aggressive, SAS may become profitable much later than analysts predict.

ASX:SAS Past Future Earnings October 23rd 18
ASX:SAS Past Future Earnings October 23rd 18

Underlying developments driving SAS’s growth isn’t the focus of this broad overview, 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 I wrap up, there’s one aspect worth mentioning. SAS currently has no debt on its balance sheet, which is rare for a loss-making loss-making, growth company, which typically has high debt relative to its equity. This means that SAS 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 key fundamentals of SAS which are not covered in this article, but I must stress again that this is merely a basic overview. For a more comprehensive look at SAS, take a look at SAS’s company page on Simply Wall St. I’ve also compiled a list of key factors you should further examine:

  1. Valuation: What is SAS 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 SAS 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 Sky andce Global’s board and the CEO’s back ground.
  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.

To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.

The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.