NETSTARS Co.,Ltd. (TSE:5590) On The Verge Of Breaking Even

NETSTARS Co.,Ltd. (TSE:5590) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. NETSTARS Co.,Ltd. engages in the QR code payment business in Japan. With the latest financial year loss of JP¥347m and a trailing-twelve-month loss of JP¥319m, the JP¥14b market-cap company alleviated its loss by moving closer towards its target of breakeven. Many investors are wondering about the rate at which NETSTARSLtd 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 NETSTARSLtd

NETSTARSLtd is bordering on breakeven, according to some Japanese Diversified Financial analysts. They anticipate the company to incur a final loss in 2024, before generating positive profits of JP¥474m in 2025. Therefore, the company is expected to breakeven roughly a year 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 104%, which is extremely buoyant. 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 NETSTARSLtd's upcoming projects, though, take into account that by and large 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 NETSTARSLtd has no debt on its balance sheet, which is quite unusual for a cash-burning growth company, which usually has a high level of debt relative to its equity. This means that the company has been operating purely on its equity investment and has no debt burden. This aspect reduces the risk around investing in the loss-making company.

Next Steps:

There are too many aspects of NETSTARSLtd to cover in one brief article, but the key fundamentals for the company can all be found in one place – NETSTARSLtd's company page on Simply Wall St. We've also put together a list of relevant aspects you should further examine:

1. Historical Track Record: What has NETSTARSLtd'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 NETSTARSLtd'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.