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

With the business potentially at an important milestone, we thought we'd take a closer look at Transat A.T. Inc.'s (TSE:TRZ) future prospects. Transat A.T. Inc. operates as an integrated international tourism company in the Americas and Europe. The CA$139m market-cap company posted a loss in its most recent financial year of CA$445m and a latest trailing-twelve-month loss of CA$155m shrinking the gap between loss and breakeven. The most pressing concern for investors is Transat A.T's path to profitability – when will it breakeven? Below we will provide a high-level summary of the industry analysts’ expectations for the company.

See our latest analysis for Transat A.T

According to the 5 industry analysts covering Transat A.T, the consensus is that breakeven is near. They anticipate the company to incur a final loss in 2024, before generating positive profits of CA$14m in 2025. Therefore, the company is expected to breakeven roughly 2 years from today. What rate will the company have to grow year-on-year in order to breakeven on this date? Using a line of best fit, we calculated an average annual growth rate of 98%, which is rather optimistic! If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.

Given this is a high-level overview, we won’t go into details of Transat A.T's upcoming projects, 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.

One thing we would like to bring into light with Transat A.T is it currently has negative equity on its balance sheet. Accounting methods used to deal with losses accumulated over time can cause this to occur. This is because liabilities are carried forward into the future until it cancels. 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 relevant factors you should look at:

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.