When Can We Expect A Profit From Empir Group AB (STO:EMPIR B)?

We feel now is a pretty good time to analyse Empir Group AB's (STO:EMPIR B) business as it appears the company may be on the cusp of a considerable accomplishment. Empir Group AB, together with its subsidiaries, provides IT consulting services in Sweden. On 31 December 2020, the kr65m market-cap company posted a loss of kr24m for its most recent financial year. The most pressing concern for investors is Empir Group'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.

See our latest analysis for Empir Group

Empir Group is bordering on breakeven, according to some Swedish IT analysts. They expect the company to post a final loss in 2021, before turning a profit of kr3.0m in 2022. The company is therefore projected to breakeven just over a year from today. 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 140% 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 Empir Group's 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 7.8% 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 Empir Group 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 Empir Group, take a look at Empir Group's company page on Simply Wall St. We've also compiled a list of pertinent aspects you should further research:

1. Valuation: What is Empir 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 Empir 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 Empir 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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