Breakeven Is Near for Vectron Systems AG (ETR:V3S)

With the business potentially at an important milestone, we thought we'd take a closer look at Vectron Systems AG's (ETR:V3S) future prospects. Vectron Systems AG manufactures, sells, and installs intelligent POS systems and communication software for the networking worldwide. The €101m market-cap company announced a latest loss of €2.1m on 31 December 2020 for its most recent financial year result. As path to profitability is the topic on Vectron Systems' 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 Vectron Systems

According to the 3 industry analysts covering Vectron Systems, the consensus is that breakeven is near. They anticipate the company to incur a final loss in 2020, before generating positive profits of €2.4m in 2021. So, the company is predicted to breakeven approximately a year 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 27% is expected, 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.

Underlying developments driving Vectron Systems' growth isn’t the focus of this broad overview, though, take into account that typically a high forecast growth rate is not unusual for a company that is currently undergoing an investment period.

Before we wrap up, there’s one issue worth mentioning. Vectron Systems currently has a relatively high level of debt. Generally, the rule of thumb is debt shouldn’t exceed 40% of your equity, which in Vectron Systems' case is 43%. 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 Vectron Systems, so if you are interested in understanding the company at a deeper level, take a look at Vectron Systems' company page on Simply Wall St. We've also put together a list of important factors you should further research:

1. Valuation: What is Vectron Systems 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 Vectron Systems 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 Vectron Systems’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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