When Will Kerlink SA (EPA:ALKLK) Turn A Profit?

With the business potentially at an important milestone, we thought we'd take a closer look at Kerlink SA's (EPA:ALKLK) future prospects. Kerlink SA provides network infrastructure solutions for the Internet of things (IoT) market to historical and alternative operators, businesses, and utilities worldwide. On 31 December 2020, the €25m market-cap company posted a loss of €5.7m for its most recent financial year. Many investors are wondering about the rate at which Kerlink will turn a profit, with the big question being “when will the company breakeven?” 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 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 2021, before generating positive profits of €900k in 2022. 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 122%, 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 Kerlink's growth isn’t the focus of this broad overview, 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.

One thing we would like to bring into light with Kerlink is its relatively high level of debt. Typically, debt shouldn’t exceed 40% of your equity, which in Kerlink's case is 60%. Note that a higher debt obligation increases the risk around 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 compiled a list of important 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. 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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