When Will 7digital Group plc (LON:7DIG) Breakeven?

7digital Group plc's (AIM:7DIG): 7digital Group plc operates as a B2B digital music and radio services company in the United Kingdom, rest of Europe, and internationally. The UK£20.24M market-cap company’s loss lessens since it announced a -UK£5.34M bottom-line in the full financial year, compared to the latest trailing-twelve-month loss of -UK£5.10M, as it approaches breakeven. As path to profitability is the topic on 7DIG’s investors mind, I’ve decided to gauge market sentiment. I’ve put together a brief outline of industry analyst expectations for 7DIG, its year of breakeven and its implied growth rate.

7DIG is bordering on breakeven, according to analysts. They expect the company to post a final loss in 2017, before turning a profit of UK£493.00K in 2018. Therefore, 7DIG is expected to breakeven roughly a couple of months from now! In order to meet this breakeven date, I calculated the rate at which 7DIG must grow year-on-year. It turns out an average annual growth rate of 110.83% is expected, which is extremely buoyant. Should the business grow at a slower rate, it will become profitable at a later date than expected.

Given this is a high-level overview, I won’t go into detail the detail of 7DIG’s upcoming projects, however, bear in mind that by and large a high forecast growth rate is not unusual for a company that is currently undergoing an investment period.

Before I wrap up, there’s one issue worth mentioning. 7DIG currently has negative equity on its balance sheet. Accounting methods used to deal with losses accumulated over time can cause this to occur. This is because liabilities are carried forward into the future until it cancels. These losses tend to occur only on paper, however, in other cases it can be forewarning.

Next Steps:

This article is not intended to be a comprehensive analysis on 7DIG, so if you are interested in understanding the company at a deeper level, take a look at 7DIG’s company page on Simply Wall St. I’ve also put together a list of pertinent aspects you should further examine:

1. Valuation: What is 7DIG 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 7DIG 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 7digital Group’s board and the CEO’s back ground.
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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Simply Wall St analyst Simply Wall St and Simply Wall St have no position in any of the companies mentioned. This article 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.