We Might See A Profit From Merit Group plc (LON:MRIT) Soon

With the business potentially at an important milestone, we thought we'd take a closer look at Merit Group plc's (LON:MRIT) future prospects. 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. With the latest financial year loss of UK£3.6m and a trailing-twelve-month loss of UK£2.8m, the UK£17m market-cap company alleviated its loss by moving closer towards its target of breakeven. The most pressing concern for investors is Merit Group's path to profitability – when will it breakeven? In this article, we will touch on the expectations for the company's growth and when analysts expect it to become profitable.

View 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 2023, before turning a profit of UK£200k in 2024. So, the company is predicted to breakeven approximately 12 months from now or less. At what rate will the company have to grow in order to realise the consensus estimates forecasting breakeven in under 12 months? Using a line of best fit, we calculated an average annual growth rate of 169%, 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, we won’t go into details of Merit Group's upcoming projects, though, keep 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’d like to point out is that The company has managed its capital judiciously, 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 compiled a list of important aspects you should look at:

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.