Tekmar Group plc's (LON:TGP) Shift From Loss To Profit

We feel now is a pretty good time to analyse Tekmar Group plc's (LON:TGP) business as it appears the company may be on the cusp of a considerable accomplishment. Tekmar Group plc, together with its subsidiaries, designs, manufactures, and supplies subsea stability and protection technology to offshore energy markets. With the latest financial year loss of UK£5.1m and a trailing-twelve-month loss of UK£7.4m, the UK£8.9m market-cap company amplified its loss by moving further away from its breakeven target. The most pressing concern for investors is Tekmar Group's path to profitability – when will it breakeven? Below we will provide a high-level summary of the industry analysts’ expectations for the company.

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According to some industry analysts covering Tekmar Group, breakeven is near. They expect the company to post a final loss in 2026, before turning a profit of UK£1.9m in 2027. Therefore, the company is expected to breakeven roughly 2 years from now. How fast will the company have to grow each year in order to reach the breakeven point by 2027? Working backwards from analyst estimates, it turns out that they expect the company to grow 110% year-on-year, on average, which signals high confidence from analysts. 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 Tekmar Group's upcoming projects, however, bear in mind that typically an energy business has lumpy cash flows which are contingent on the natural resource and stage at which the company is operating. So, a high growth rate is not out of the ordinary, particularly when a company is in a period of investment.

View our latest analysis for Tekmar Group

Before we wrap up, there’s one aspect worth mentioning. The company has managed its capital prudently, with debt making up 23% of equity. This means that it has predominantly funded its operations from equity capital, and its low debt obligation reduces the risk around investing in the loss-making company.

Next Steps:

This article is not intended to be a comprehensive analysis on Tekmar Group, so if you are interested in understanding the company at a deeper level, take a look at Tekmar Group's company page on Simply Wall St. We've also put together a list of relevant aspects you should further research:

1. Valuation: What is Tekmar Group 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 Tekmar Group 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 Tekmar Group’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.