Cornerstone FS plc (LON:CSFS) Could Be Less Than A Year Away From Profitability

We feel now is a pretty good time to analyse Cornerstone FS plc's (LON:CSFS) business as it appears the company may be on the cusp of a considerable accomplishment. Cornerstone FS plc provides international payment, currency risk management, and electronic account services using its proprietary cloud-based multicurrency payments platform. With the latest financial year loss of UK£5.6m and a trailing-twelve-month loss of UK£2.6m, the UK£16m market-cap company alleviated its loss by moving closer towards its target of breakeven. Many investors are wondering about the rate at which Cornerstone FS 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.

See our latest analysis for Cornerstone FS

Cornerstone FS is bordering on breakeven, according to some British Diversified Financial analysts. They anticipate the company to incur a final loss in 2023, before generating positive profits of UK£798k in 2024. Therefore, the company is expected to breakeven roughly 12 months from now or less. We calculated the rate at which the company must grow to meet the consensus forecasts predicting breakeven within 12 months. It turns out an average annual growth rate of 73% is expected, which signals high confidence from analysts. Should the business grow at a slower rate, it will become profitable at a later date than expected.

Underlying developments driving Cornerstone FS' growth isn’t the focus of this broad overview, but, bear in mind that generally 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 Cornerstone FS is its debt-to-equity ratio of over 2x. Generally, the rule of thumb is 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 Cornerstone FS 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 Cornerstone FS, take a look at Cornerstone FS' company page on Simply Wall St. We've also put together a list of essential aspects you should further research:

1. Historical Track Record: What has Cornerstone FS' 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 Cornerstone FS' 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.