Prologue S.A. (EPA:PROL) Is About To Turn The Corner

Prologue S.A. (EPA:PROL) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. Prologue S.A. delivers cloud, IP communications, and enterprise content management (ECM) and exchange (EDI) solutions in France and internationally. With the latest financial year loss of €2.2m and a trailing-twelve-month loss of €2.1m, the €20m market-cap company alleviated its loss by moving closer towards its target of breakeven. As path to profitability is the topic on Prologue's investors mind, we've decided to gauge market sentiment. Below we will provide a high-level summary of the industry analysts’ expectations for the company.

See our latest analysis for Prologue

Prologue is bordering on breakeven, according to some French Software analysts. They anticipate the company to incur a final loss in 2020, before generating positive profits of €900k in 2021. The company is therefore projected to breakeven around a year from now or less! At what rate will the company have to grow in order to realise the consensus estimates forecasting breakeven in under 12 months? Using a line of best fit, we calculated an average annual growth rate of 107%, which is rather optimistic! If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.

Underlying developments driving Prologue's growth isn’t the focus of this broad overview, but, bear in mind that typically 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 Prologue is its relatively high level of debt. Typically, debt shouldn’t exceed 40% of your equity, which in Prologue's case is 68%. A higher level of debt requires more stringent capital management which increases the risk around investing in the loss-making company.

Next Steps:

There are too many aspects of Prologue to cover in one brief article, but the key fundamentals for the company can all be found in one place – Prologue's company page on Simply Wall St. We've also compiled a list of relevant aspects you should look at:

1. Valuation: What is Prologue 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 Prologue 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 Prologue’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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