Market Sentiment Around Loss-Making ECSC Group plc (LON:ECSC)

ECSC Group plc’s (LON:ECSC): ECSC Group plc provides information and cyber security services. The UK£8.0m market-cap company announced a latest loss of -UK£1.2m on 31 December 2018 for its most recent financial year result. As path to profitability is the topic on ECSC’s investors mind, I’ve decided to gauge market sentiment. In this article, I will touch on the expectations for ECSC’s growth and when analysts expect the company to become profitable.

Check out our latest analysis for ECSC Group

ECSC is bordering on breakeven, according to IT analysts. They expect the company to post a final loss in 2019, before turning a profit of UK£701k in 2020. So, ECSC is predicted to breakeven approximately a few months from now. How fast will ECSC have to grow each year in order to reach the breakeven point by 2020? Working backwards from analyst estimates, it turns out that they expect the company to grow 142% year-on-year, on average, which is extremely buoyant. If this rate turns out to be too aggressive, ECSC may become profitable much later than analysts predict.

AIM:ECSC Past and Future Earnings, April 18th 2019
AIM:ECSC Past and Future Earnings, April 18th 2019

Underlying developments driving ECSC’s growth isn’t the focus of this broad overview, however, bear in mind that generally a high forecast growth rate is not unusual for a company that is currently undergoing an investment period.

One thing I’d like to point out is that ECSC has managed its capital prudently, with debt making up 3.8% of equity. This means that ECSC 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 too many aspects of ECSC to cover in one brief article, but the key fundamentals for the company can all be found in one place – ECSC’s company page on Simply Wall St. I’ve also put together a list of key aspects you should further research:

  1. Historical Track Record: What has ECSC’s 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 ECSC 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.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.