Kin and Carta plc's (LON:KCT) Path To Profitability

We feel now is a pretty good time to analyse Kin and Carta plc's (LON:KCT) business as it appears the company may be on the cusp of a considerable accomplishment. Kin and Carta plc provides technology, data, consultancy, and digital transformation services in the United Kingdom, the United States, and internationally. With the latest financial year loss of UK£14m and a trailing-twelve-month loss of UK£23m, the UK£133m market-cap company amplified its loss by moving further away from its breakeven target. Many investors are wondering about the rate at which Kin and Carta will turn a profit, with the big question being “when will the company breakeven?” We've put together a brief outline of industry analyst expectations for the company, its year of breakeven and its implied growth rate.

Check out our latest analysis for Kin and Carta

Kin and Carta is bordering on breakeven, according to the 3 British IT analysts. They expect the company to post a final loss in 2024, before turning a profit of UK£5.4m in 2025. Therefore, the company is expected to breakeven roughly 2 years from now. In order to meet this breakeven date, we calculated the rate at which the company must grow year-on-year. It turns out an average annual growth rate of 111% is expected, which signals high confidence from analysts. If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.

Given this is a high-level overview, we won’t go into details of Kin and Carta's upcoming projects, however, 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 20% 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 Kin and Carta 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 Kin and Carta, take a look at Kin and Carta's company page on Simply Wall St. We've also compiled a list of pertinent factors you should further research:

1. Valuation: What is Kin and Carta 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 Kin and Carta 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 Kin and Carta’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.