When Will Transat A.T. Inc. (TSE:TRZ) Breakeven?

We feel now is a pretty good time to analyse Transat A.T. Inc.'s (TSE:TRZ) business as it appears the company may be on the cusp of a considerable accomplishment. Transat A.T. Inc. operates as an integrated international tourism company in the Americas and Europe. With the latest financial year loss of CA$445m and a trailing-twelve-month loss of CA$388m, the CA$185m market-cap company alleviated its loss by moving closer towards its target of breakeven. As path to profitability is the topic on Transat A.T's investors mind, we've decided to gauge market sentiment. We've put together a brief outline of industry analyst expectations for the company, its year of breakeven and its implied growth rate.

See our latest analysis for Transat A.T

Transat A.T is bordering on breakeven, according to the 5 Canadian Airlines analysts. They anticipate the company to incur a final loss in 2024, before generating positive profits of CA$37m in 2025. Therefore, the company is expected to breakeven roughly 2 years 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 111% is expected, 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 Transat A.T given that this is a high-level summary, however, keep in mind that by and large a high forecast growth rate is not unusual for a company that is currently undergoing an investment period.

One thing we would like to bring into light with Transat A.T is it currently has negative equity on its balance sheet. This can sometimes arise from accounting methods used to deal with accumulated losses from prior years, which are viewed as liabilities carried forward until it cancels out in the future. Oftentimes, losses exist only on paper but other times, it can be a red flag.

Next Steps:

There are too many aspects of Transat A.T to cover in one brief article, but the key fundamentals for the company can all be found in one place – Transat A.T's company page on Simply Wall St. We've also compiled a list of pertinent aspects you should further research:

1. Valuation: What is Transat A.T 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 Transat A.T 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 Transat A.T’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.