Enthusiast Gaming Holdings Inc. (TSE:EGLX) Has Found A Path To Profitability

With the business potentially at an important milestone, we thought we'd take a closer look at Enthusiast Gaming Holdings Inc.'s (TSE:EGLX) future prospects. Enthusiast Gaming Holdings Inc., an integrated gaming entertainment company, engages in the media, content, entertainment and esports, and subscription businesses in the United States, Canada, England and Wales, and internationally. The CA$21m market-cap company posted a loss in its most recent financial year of CA$118m and a latest trailing-twelve-month loss of CA$52m shrinking the gap between loss and breakeven. The most pressing concern for investors is Enthusiast Gaming Holdings' path to profitability – when will it breakeven? Below we will provide a high-level summary of the industry analysts’ expectations for the company.

Check out our latest analysis for Enthusiast Gaming Holdings

According to the 7 industry analysts covering Enthusiast Gaming Holdings, the consensus is that breakeven is near. They expect the company to post a final loss in 2024, before turning a profit of CA$95k in 2025. Therefore, the company is expected to breakeven roughly 12 months from now or less. How fast will the company have to grow to reach the consensus forecasts that anticipate breakeven by 2025? Working backwards from analyst estimates, it turns out that they expect the company to grow 140% year-on-year, on average, which is rather optimistic! If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.

We're not going to go through company-specific developments for Enthusiast Gaming Holdings given that this is a high-level summary, however, 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 aspect worth mentioning. The company has managed its capital judiciously, with debt making up 30% 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:

There are too many aspects of Enthusiast Gaming Holdings to cover in one brief article, but the key fundamentals for the company can all be found in one place – Enthusiast Gaming Holdings' company page on Simply Wall St. We've also put together a list of key factors you should further research:

1. Valuation: What is Enthusiast Gaming 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 Enthusiast Gaming 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 Enthusiast Gaming 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. 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.