AcuityAds Holdings Inc.'s (TSE:AT) About To Shift From Loss To Profit

By
Simply Wall St
Published
October 20, 2020
TSX:AT

AcuityAds Holdings Inc. (TSE:AT) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. AcuityAds Holdings Inc., a technology company, provides digital media solutions. With the latest financial year loss of CA$5.6m and a trailing-twelve-month loss of CA$760k, the CA$206m market-cap company alleviated its loss by moving closer towards its target of breakeven. The most pressing concern for investors is AcuityAds Holdings' 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.

See our latest analysis for AcuityAds Holdings

AcuityAds Holdings is bordering on breakeven, according to the 5 Canadian Interactive Media and Services analysts. They anticipate the company to incur a final loss in 2019, before generating positive profits of CA$2.3m in 2020. Therefore, the company is expected to breakeven roughly 12 months from now or less. We calculated the rate at which the company must grow to meet the consensus forecasts predicting breakeven within 12 months. It turns out an average annual growth rate of 174% is expected, which is extremely buoyant. Should the business grow at a slower rate, it will become profitable at a later date than expected.

earnings-per-share-growth
TSX:AT Earnings Per Share Growth October 20th 2020

Underlying developments driving AcuityAds Holdings' growth isn’t the focus of this broad overview, though, bear in mind that typically 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 issue worth mentioning. AcuityAds Holdings currently has a debt-to-equity ratio of 136%. Typically, debt shouldn’t exceed 40% of your equity, which in this case, the company has significantly overshot. 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 AcuityAds Holdings, so if you are interested in understanding the company at a deeper level, take a look at AcuityAds Holdings' company page on Simply Wall St. We've also put together a list of key aspects you should further research:

  1. Valuation: What is AcuityAds Holdings 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 AcuityAds Holdings 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 AcuityAds Holdings’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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