Irisity AB (publ) (STO:IRIS) Could Be Less Than A Year Away From Profitability

We feel now is a pretty good time to analyse Irisity AB (publ)'s (STO:IRIS) business as it appears the company may be on the cusp of a considerable accomplishment. Irisity AB (publ) provides camera surveillance solutions. The kr1.6b market-cap company announced a latest loss of kr20m on 31 December 2020 for its most recent financial year result. The most pressing concern for investors is Irisity's path to profitability – when will it breakeven? We've put together a brief outline of industry analyst expectations for the company, its year of breakeven and its implied growth rate.

View our latest analysis for Irisity

Expectations from some of the Swedish Commercial Services analysts is that Irisity is on the verge of breakeven. They expect the company to post a final loss in 2020, before turning a profit of kr11m in 2021. The company is therefore projected to breakeven around a year from now or less! How fast will the company have to grow to reach the consensus forecasts that anticipate breakeven by 2021? Working backwards from analyst estimates, it turns out that they expect the company to grow 94% 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.

We're not going to go through company-specific developments for Irisity given that this is a high-level summary, however, take into account that generally 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. Irisity currently has no debt on its balance sheet, which is rare for a loss-making growth company, which typically has high 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 Irisity to cover in one brief article, but the key fundamentals for the company can all be found in one place – Irisity's company page on Simply Wall St. We've also compiled a list of important factors you should look at:

1. Valuation: What is Irisity 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 Irisity 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 Irisity’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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