Market Sentiment Around Loss-Making Kerlink SA (EPA:ALKLK)

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 worldwide. The €4.8m market-cap company announced a latest loss of €3.5m on 31 December 2022 for its most recent financial year result. Many investors are wondering about the rate at which Kerlink will turn a profit, with the big question being “when will the company breakeven?” Below we will provide a high-level summary of the industry analysts’ expectations for the company.

Check out our latest analysis for Kerlink

Kerlink is bordering on breakeven, according to some French Communications analysts. They expect the company to post a final loss in 2024, before turning a profit of €900k in 2025. The company is therefore projected to breakeven around 2 years 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 65%, which signals high confidence from analysts. 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, but, take into account 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 Kerlink is its debt-to-equity ratio of 110%. Generally, the rule of thumb is debt shouldn’t exceed 40% of your equity, and the company has considerably exceeded this. Note that a higher debt obligation increases the risk in investing in the loss-making company.

Next Steps:

There are key fundamentals of Kerlink which are not covered in this article, but we must stress again that this is merely a basic overview. For a more comprehensive look at Kerlink, take a look at Kerlink's company page on Simply Wall St. We've also put together a list of important aspects you should further research:

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.