Analysts Expect Breakeven For Finatext Holdings Ltd. (TSE:4419) Before Long

We feel now is a pretty good time to analyse Finatext Holdings Ltd.'s (TSE:4419) business as it appears the company may be on the cusp of a considerable accomplishment. Finatext Holdings Ltd. engages in the fintech solution, big data analysis, and financial infrastructure businesses in Japan. With the latest financial year loss of JP¥388m and a trailing-twelve-month loss of JP¥356m, the JP¥45b market-cap company alleviated its loss by moving closer towards its target of breakeven. Many investors are wondering about the rate at which Finatext Holdings will turn a profit, with the big question being “when will the company breakeven?” In this article, we will touch on the expectations for the company's growth and when analysts expect it to become profitable.

View our latest analysis for Finatext Holdings

Expectations from some of the Japanese IT analysts is that Finatext Holdings is on the verge of breakeven. They anticipate the company to incur a final loss in 2024, before generating positive profits of JP¥1.2b in 2025. Therefore, the company is expected to breakeven just over a year from now. 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 95%, which is rather optimistic! 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 Finatext Holdings' upcoming projects, but, keep in mind that typically a high forecast growth rate is not unusual for a company that is currently undergoing an investment period.

Before we wrap up, there’s one aspect worth mentioning. The company has managed its capital prudently, with debt making up 8.5% 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 Finatext Holdings, so if you are interested in understanding the company at a deeper level, take a look at Finatext Holdings' company page on Simply Wall St. We've also compiled a list of relevant factors you should look at:

1. Historical Track Record: What has Finatext Holdings' 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 Finatext Holdings' 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.