Sportech PLC's (LON:SPO) Path To Profitability

We feel now is a pretty good time to analyse Sportech PLC's (LON:SPO) business as it appears the company may be on the cusp of a considerable accomplishment. Sportech PLC, a sports entertainment company, provides technology solutions for gaming companies, sports teams, racetracks, and casinos and lottery clients in the United Kingdom, North America, South America, Europe, and internationally. With the latest financial year loss of UK£14m and a trailing-twelve-month loss of UK£23m, the UK£58m market-cap company amplified its loss by moving further away from its breakeven target. The most pressing concern for investors is Sportech's 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.

View our latest analysis for Sportech

According to the 2 industry analysts covering Sportech, the consensus is that breakeven is near. They expect the company to post a final loss in 2021, before turning a profit of UK£1.4m in 2022. So, the company is predicted to breakeven just over a year from today. 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 103%, which is extremely buoyant. Should the business grow at a slower rate, it will become profitable at a later date than expected.

Underlying developments driving Sportech's growth isn’t the focus of this broad overview, however, bear in mind that typically 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 aspect worth mentioning. Sportech currently has no debt on its balance sheet, which is quite unusual for a cash-burning growth company, which typically has high debt relative to its equity. The company currently operates purely off its shareholder funding and has no debt obligation, reducing concerns around repayments and making it a less risky investment.

Next Steps:

There are key fundamentals of Sportech 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 Sportech, take a look at Sportech's company page on Simply Wall St. We've also compiled a list of key aspects you should further research:

1. Historical Track Record: What has Sportech's performance been like over the past? Go into more detail in the past track record analysis and take a look at the free visual representations of our analysis for more clarity.
2. Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Sportech'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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