When Can We Expect A Profit From Shearwater Group plc (LON:SWG)?

We feel now is a pretty good time to analyse Shearwater Group plc's (LON:SWG) business as it appears the company may be on the cusp of a considerable accomplishment. Shearwater Group plc provides operational resilience solutions in the United Kingdom, Europe, North America, and internationally. With the latest financial year loss of UK£1.5m and a trailing-twelve-month loss of UK£911k, the UK£33m market-cap company alleviated its loss by moving closer towards its target of breakeven. As path to profitability is the topic on Shearwater Group's investors mind, we've decided to gauge market sentiment. Below we will provide a high-level summary of the industry analysts’ expectations for the company.

See our latest analysis for Shearwater Group

According to the 2 industry analysts covering Shearwater Group, the consensus is that breakeven is near. They anticipate the company to incur a final loss in 2021, before generating positive profits of UK£3.0m in 2022. Therefore, the company is expected to breakeven roughly 2 years 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 94%, which is rather optimistic! If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.

Underlying developments driving Shearwater Group's growth isn’t the focus of this broad overview, but, keep in mind that typically a high growth rate is not out of the ordinary, particularly when a company is in a period of investment.

Before we wrap up, there’s one aspect worth mentioning. The company has managed its capital judiciously, with debt making up 1.4% 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 too many aspects of Shearwater Group to cover in one brief article, but the key fundamentals for the company can all be found in one place – Shearwater Group's company page on Simply Wall St. We've also compiled a list of important aspects you should further examine:

1. Valuation: What is Shearwater 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 Shearwater 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 Shearwater 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. 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.
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