Breakeven Is Near for Vonex Limited (ASX:VN8)

By
Simply Wall St
Published
January 20, 2021
ASX:VN8
Source: Shutterstock

We feel now is a pretty good time to analyse Vonex Limited's (ASX:VN8) business as it appears the company may be on the cusp of a considerable accomplishment. Vonex Limited provides telecommunications services in Australia and the United States. On 30 June 2020, the AU$46m market-cap company posted a loss of AU$596k for its most recent financial year. Many investors are wondering about the rate at which Vonex 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.

Check out our latest analysis for Vonex

Expectations from some of the Australian Telecom analysts is that Vonex is on the verge of breakeven. They anticipate the company to incur a final loss in 2020, before generating positive profits of AU$1.2m in 2021. The company is therefore projected to breakeven around 12 months 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 111%, which signals high confidence from analysts. If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.

earnings-per-share-growth
ASX:VN8 Earnings Per Share Growth January 21st 2021

Underlying developments driving Vonex's growth isn’t the focus of this broad overview, however, bear in mind that typically 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 Vonex has no debt on its balance sheet, which is rare for a loss-making loss-making, growth company, which usually has a high level of debt relative to its equity. The company currently operates purely off its shareholder funding and has no debt obligation, reducing concerns around repayments and making it a less risky investment.

Next Steps:

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

  1. Historical Track Record: What has Vonex's 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 Vonex'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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Simply Wall St

Simply Wall St is focused on providing unbiased, high-quality research coverage on every listed company in the world. Our research team consists of data scientists and multiple equity analysts with over two decades worth of financial markets experience between them.