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

With the business potentially at an important milestone, we thought we'd take a closer look at Shearwater Group plc's (LON:SWG) future prospects. 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£43m 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.

Check out our latest analysis for Shearwater Group

Expectations from some of the British Software analysts is that Shearwater Group is on the verge of breakeven. They anticipate the company to incur a final loss in 2021, before generating positive profits of UK£3.0m in 2022. So, the company is predicted to breakeven just over a year from now. How fast will the company have to grow each year in order to reach the breakeven point by 2022? Working backwards from analyst estimates, it turns out that they expect the company to grow 63% year-on-year, on average, which signals high confidence from analysts. Should the business grow at a slower rate, it will become profitable at a later date than expected.

Underlying developments driving Shearwater Group's growth isn’t the focus of this broad overview, though, 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.

One thing we’d like to point out is that 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:

This article is not intended to be a comprehensive analysis on Shearwater Group, so if you are interested in understanding the company at a deeper level, take a look at Shearwater Group's company page on Simply Wall St. We've also compiled a list of key aspects you should further research:

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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