When Can We Expect A Profit From 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 in Europe, the Middle East and Africa, the Asia-Pacific, and the Americas. On 31 December 2023, the €4.8m market-cap company posted a loss of €4.7m for its most recent financial year. 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.

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 2025, before turning a profit of €500k in 2026. Therefore, the company is expected to breakeven roughly 2 years from now. In order to meet this breakeven date, we calculated the rate at which the company must grow year-on-year. It turns out an average annual growth rate of 71% is expected, which is extremely buoyant. 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 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 Kerlink is its debt-to-equity ratio of 171%. Typically, 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 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 pertinent aspects 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.