Kerlink SA (EPA:ALKLK): When Will It Breakeven?

Kerlink SA (EPA:ALKLK) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. Kerlink SA provides network infrastructure solutions for the Internet of Things (IoT) market to historical and alternative operators, businesses, and utilities in Europe, the Middle East and Africa, the Asia-Pacific, and the Americas. The €5.1m market-cap company announced a latest loss of €4.7m on 31 December 2023 for its most recent financial year result. The most pressing concern for investors is Kerlink's path to profitability – when will it breakeven? In this article, we will touch on the expectations for the company's growth and when analysts expect it to become profitable.

See our latest analysis for Kerlink

Expectations from some of the French Communications analysts is that Kerlink is on the verge of breakeven. They anticipate the company to incur a final loss in 2024, before generating positive profits of €300k in 2025. Therefore, the company is expected to breakeven just over a year from now. 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 115%, which is rather optimistic! Should the business grow at a slower rate, it will become profitable at a later date than expected.

Given this is a high-level overview, we won’t go into details of Kerlink's upcoming projects, though, take into account that by and large 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 issue worth mentioning. Kerlink currently has a debt-to-equity ratio of 171%. Generally, the rule of thumb is debt shouldn’t exceed 40% of your equity, which in this case, the company has significantly overshot. A higher level of debt requires more stringent capital management which increases the risk in investing in the loss-making company.

Next Steps:

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

1. Valuation: What is Kerlink 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 Kerlink 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 Kerlink’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.