Merit Group plc's (LON:MRIT) Shift From Loss To Profit

Merit Group plc (LON:MRIT) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. Merit Group plc gathers, organizes, and enriches data that informs b2b intelligence brands in the United Kingdom, Belgium, the United States, France, Germany, and internationally. The UK£19m market-cap company’s loss lessened since it announced a UK£3.6m loss in the full financial year, compared to the latest trailing-twelve-month loss of UK£2.8m, as it approaches breakeven. As path to profitability is the topic on Merit Group's investors mind, we've decided to gauge market sentiment. In this article, we will touch on the expectations for the company's growth and when analysts expect it to become profitable.

See our latest analysis for Merit Group

Merit Group is bordering on breakeven, according to some British Media analysts. They expect the company to post a final loss in 2024, before turning a profit of UK£800k in 2025. The company is therefore projected 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 169%, which is rather optimistic! 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, we won’t go into details of Merit Group's upcoming projects, but, keep in mind that typically a high forecast growth rate is not unusual for a company that is currently undergoing an investment period.

Before we wrap up, there’s one aspect worth mentioning. The company has managed its capital prudently, with debt making up 11% 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:

There are key fundamentals of Merit Group 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 Merit Group, take a look at Merit Group's company page on Simply Wall St. We've also put together a list of pertinent aspects you should further examine:

1. Valuation: What is Merit 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 Merit 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 Merit 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.