Analysts Expect Breakeven For Transense Technologies plc (LON:TRT) Before Long

Transense Technologies plc (LON:TRT) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. Transense Technologies plc develops, manufactures, and sells wireless and battery-less sensor systems using surface acoustic wave technology primarily in the United Kingdom. The UK£8.6m market-cap company announced a latest loss of UK£1.1m on 30 June 2020 for its most recent financial year result. The most pressing concern for investors is Transense Technologies' path to profitability – when will it 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 Transense Technologies

According to some industry analysts covering Transense Technologies, breakeven is near. They anticipate the company to incur a final loss in 2021, before generating positive profits of UK£400k in 2022. Therefore, the company is expected to breakeven just over a year from today. How fast will the company have to grow each year in order to reach the breakeven point by 2022? Working backwards from analyst estimates, it turns out that they expect the company to grow 141% year-on-year, on average, which is rather optimistic! If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.

Given this is a high-level overview, we won’t go into details of Transense Technologies' upcoming projects, however, take into account that generally 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. Transense Technologies currently has a relatively high level of debt. Typically, debt shouldn’t exceed 40% of your equity, which in Transense Technologies' case is 45%. 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 Transense Technologies 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 Transense Technologies, take a look at Transense Technologies' company page on Simply Wall St. We've also put together a list of pertinent aspects you should further research:

1. Valuation: What is Transense Technologies 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 Transense Technologies 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 Transense Technologies’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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